Spotify Technology (NYSE:SPOT) has announced a significant workforce reduction, cutting approximately 17% of its staff, which amounts to around 1,500 jobs. This move comes as the company aims to decrease expenses and align costs with its financial goals. The decision follows a series of aggressive investments since 2020 that have inflated the company's cost structure.
Despite reporting positive third-quarter revenue and a surge in monthly active users that exceeded expectations, CEO Daniel Ek has expressed the necessity for immediate cost alignment. These layoffs are the latest in a series of reductions this year, with Spotify having previously reduced its workforce by 6% in January and made targeted cuts within its podcast division in June, totaling around 800 positions.
In light of the announcement and strategic considerations for future planning by Ek, Spotify's shares saw an uptick in premarket trading to $184.66 today. The company's restructuring efforts are a response to substantial growth spurred by expanded teams, content offerings, and market presence over the last few years.
Despite the workforce reductions, analysts maintain a Moderate Buy consensus rating on SPOT stock. They anticipate a modest rise in its value following Spotify's strong performance in the third quarter.
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