Twitter Laying Off 8 Percent Of All Employees — What’s Going Wrong?

Shortly after announcing that Twitter was heading in a direction that was “extremely strong and beautiful,” Chief Executive of the company Jack Dorsey revealed that Twitter will be laying off a staggering 8 percent of its staff.

According to the L.A. Times, this includes 336 out of 4,100 employees across the globe. While Twitter claims this is simply part of a plan to restructure the company, many are concerned that the social media platform could be in serious danger.

A securities filing from Twitter is open for public viewing, revealing the company’s strategy going forward after the massive layoffs.

“On October 12, 2015, the Board of Directors of the Company approved a restructuring and reduction in force plan of up to 336 employees, constituting approximately 8 [percent] of the Company’s global workforce,” Twitter said. “The restructuring is part of an overall plan to organize around the company’s top product priorities and drive efficiencies throughout the company. The company intends to reinvest savings in its most important priorities to drive growth.”

Twitter Goes Public On The New York Stock Exchange

To some, it sounds as though Twitter is admitting to financial troubles and deciding to spend what money they have on essential employees only. But analysts like Blake Harper from Topeka Capital Markets believe this was actually a wise move for Twitter, because it will save them a lot of money in the long run.

“The company stated it is going to reinvest the savings into driving growth, which could inhibit near term margin improvement, but should improve the workforce and expense structure.”

The Twitter securities filing does account for short term expenses from the layoffs, but expects to recoup those losses in the long run. These major changes could be exactly what Twitter needs to keep up with other major social media platforms like Facebook and Google. Blake Harper revealed that Twitter only earned about $83,000 per employee in 2014, while Google made hundreds of thousands of dollars per employee, and Facebook nearly a million.

Twitter reportedly began laying off selected employees this morning (Tuesday, October 13). Jack Dorsey himself broke the news to the Twitter workforce in an email with the subject line “A more focused Twitter.” The email reveals that the engineering department of Twitter would be enduring the largest amount of cuts, while still remaining the largest Twitter team.

“We feel strongly that Engineering will move much faster with a smaller and nimbler team, while remaining the biggest percentage of our workforce. And the rest of the organization will be streamlined in parallel… we plan to part ways with up to 336 people from across the company. We are doing this with the utmost respect for each and every person. Twitter will go to great lengths to take care of each individual by providing generous exit packages and help finding a new job.”

Twitter CEO Jack Dorsey

Twitter has been struggling to maintain growth over the past few years. While Twitter enjoys 316 million active users, few new Twitter users are signing up. According to TechCrunch, stop market investors are primarily interested in companies that are getting larger, not stagnating. However, since the announcement of the major layoffs, Twitter stock has risen 6 percent, to $30.44.

In another attempt to revive the company, Twitter recently released Moments, an additional tab to a user’s Twitter page that compiles all the most important images, videos, and tweets about a news story. Twitter is planning even more new features in the coming weeks.

“We launched the first of these experiences last week with Moments,” mentioned Dorsey in his email.

Are you a regular Twitter user? Are you worried that Twitter just laid off 8 percent of its employees?

[Image credit: Bill Pugliano / Andrew Burton / Getty Images]