Add Spotify Technology SA to the growing list of tech companies laying off because they hired too many employees during the virus pandemic. We've read countless letters and memos from tech executives to employees over the last several quarters explaining how they made a colossal mistake by rapidly expanding operations because they thought pandemic demand would continue but were entirely blindsided by the incoming slowdown and forced to reduce headcount and other cost-cutting measures.
"Like many other leaders, I hoped to sustain the strong tailwinds from the pandemic and believed that our broad global business and lower risk to the impact of a slowdown in ads would insulate us," Spotify CEO Daniel Ek told employees in a letter.
As a result of poor business planning, Ek said Spotify is planning to slash 6% of its headcount.
"In hindsight, I was too ambitious in investing ahead of our revenue growth. And for this reason, today, we are reducing our employee base by about 6% across the company. I take full accountability for the moves that got us here today," the exec said.
The latest filings show the music-streaming giant has approximately 9,800 employees. The cut would be equivalent to about 600 workers.
Shares rose more than 6% in premarket trading to the $104-handle on the news. The stock lost more than 73% since peaking at $364 in early 2021.
Ek added that Dawn Ostroff, chief content and advertising business officer, will leave the company as part of a broader reorganization.
To start, we are fundamentally changing how we operate at the top. To do this, I will be centralizing the majority of our engineering and product work under Gustav as Chief Product Officer and the business areas under Alex as Chief Business Officer.
Spotify's announcement is yet more hemorrhaging of talent from tech companies as the economic outlook sours. Amazon, Meta, Microsoft Corp, and Google have been some of the largest companies to announce cuts.
Layoff tracking website Layoffs.fyi shows that 173 tech companies so far this year have reduced headcount by 56,000. Last year, 1,035 tech companies fired 159,000 employees.