According to a letter from Spotify CEO Daniel Ek, the layoffs come after the streaming company expanded its team in 2020 and 2021 to take advantage of lower-cost capital. However, the company’s financial goals and operating costs have required the job cuts.
That letter notes that Spotify considered spreading these layoffs throughout 2024 and 2025. The reason the firm didn’t go with this plan is the need to reduce costs quickly and efficiently due to its large cost structure.
Here’s part of what Ek said in the Spotify letter to employees:
“By most metrics, we were more productive but less efficient. We need to be both. While we have done some work to mitigate this challenge and become more efficient in 2023, we still have a ways to go before we are both productive and efficient.”
What Spotify Layoffs Mean for Employees
While Spotify is cutting jobs, it is offering severance packages to employees. This includes roughly five months of severance pay, payout of accrued PTO time, healthcare during the severance period, as well as immigration and career support.
SPOT stock is up 10.5% as of Monday morning. The stock is also up 113% year-to-date (YTD).
Investors looking for even more of the hottest stock market stories on Monday are in luck!
We have all of the latest stock market news worth reading about today! A few examples include what’s going on with shares of Fisker (NYSE:FSR), Garden Stage (NASDAQ:GSIW) and NLS Pharmaceutics (NASDAQ:NLSP) stock today. All of that news is ready to go at the following links!
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On the date of publication, William White did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.