Reddit Layoffs Will Remove 5% of Employees
US-based online forum operator Reddit said it would remove 5% of its workforce and hire fewer employees. The Wall Street Journal first reported the company’s decision on Tuesday, citing an email from CEO Steve Huffman. The executive told staff the Reddit layoffs will restructure operations to help the firm break even in 2024.
This recent move shows that Reddit is joining a worrying tech industry trend. Amazon, IBM, and other digital companies have laid off workers by the thousands as they struggle against a widespread economic downturn.
Examining the online forum operator’s strategy will help us understand the tech sector’s current state. This article will discuss why Reddit will remove a significant portion of its workforce. Later, I will explain what Reddit is to help all readers understand this issue.
What are the reasons behind the Reddit layoffs?
#BusinessNews | News aggregator, Reddit lays off 5% workforce #techlayoffs #jobcuts https://t.co/iBgYY96v1m
— Republic (@republic) June 7, 2023
CEO Steve Huffman emailed employees regarding his recent decision. He wrote, “We’ve had a solid first half of the year, and this restructuring will position us to carry that momentum into the second half and beyond.”
As mentioned, the WSJ report says he will remove 5% of workers occupying 90 roles. In comparison, the company has roughly 2,000 employees globally.
Also, Reddit will reduce its 2023 hiring to almost 100 additional employees instead of the previous target of 300. The Wall Street Journal says a Reddit representative confirmed the Reddit layoffs.
Huffman said the company goals include “getting to breakeven next year” and funding API tools and data for the forum’s moderators. Moreover, he added the tech firm would increase prices for third-party developers.
The CEO said Reddit “needs to be paid fairly” to continue supporting them. Removing employees also follows the delay in the company’s initial public offering.
In December 2021, Reddit confidentially submitted a draft registration statement to the SEC for an IPO proposal. Yet, the digital firm has not posted more details at the time of writing.
Nowadays, other tech companies have been downsizing after the initial COVID boom. They gained more users in 2020 as more people spent time online.
In response, these firms hired thousands of employees, believing the demand would remain long-term. However, it dissipated in 2022 as more countries rescinded their lockdowns, letting people resume normal activities.
Also, many are worried about the United States entering a recession, which will have negative consequences worldwide. In response, more tech firms are removing thousands of employees.
Scott Kessler, global sector lead for technology, media, and telecommunications at investment firm Third Bridge, explained the trend to CNN Business. “They went from being on top of the world to having to make some really tough decisions,” he said.
“To see this dramatic reversal of fortunes… it’s not just the magnitude of these moves but the speed that they’ve played out. You’ve seen companies make the wrong strategic decisions at the wrong times.”
What is Reddit?
Photo Credit: mashable.com
You may have never heard of this company until reading this Reddit layoffs article. However, it has been a strong pillar of online community for many years.
It launched in 2005 before global media company Condé Nast acquired it the following year. In 2011, it spun out the website. Condé Nast’s parent company, Advance Publications, retains a minority stake in the platform.
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It is an online forum website where you can easily find people who share your interests. The platform divides these groups into subreddits, representing people with specific interests and beliefs.
It made headlines in 2021 after a few Redditors sparked the Gamestop short squeeze. According to DataReportal, Reddit has over 50 million daily active users and over a billion monthly active users.
Conclusion
CEO Steve Huffman announced Reddit layoffs, explaining it would help the company break even soon. Other tech companies have been downsizing too.
The tech sector went from boom to bust within a few years. Similarly, other industries may undergo major changes soon due to economic downturns.
Fortunately, you can prepare by understanding these trends further. Fortunately, you can get the latest updates in artificial intelligence, digital companies, and more at Inquirer Tech.
