Snap, Inc. is reportedly cutting 20% of its staff positions and halting projects Wednesday amid the worst sales growth in the company’s history.
The cuts to employees and new projects, including mobile games and a flying drone camera, will save the company an estimated $500 million in annual costs, according to Reuters. Shares in Snap have dropped nearly 80% since the start of 2022, closing on Tuesday at $10.03, Fox reported.
Snap Inc. is planning to begin job cuts Wednesday, laying off about 20% of its nearly 6,500 employees, according to reporting by the Verge.
— Bloomberg TV (@BloombergTV) August 31, 2022
After the cuts were announced, shares rose back up 15% in morning trading for Snap, Reuters continued. The shock echoed through the social media sector, with shares in Facebook’s parent Meta Platforms rising 5% and Pinterest notching a 6% rise.
The organization said it will now focus on improving sales as well as increasing the number of Snapchat users, Reuters continued. Current revenue growth is up 8%, which is “well below what we were expecting,” founder and chief executive Evan Spiegel said in a memo to employees Wednesday. (RELATED: ‘One Of The Worst Downturns’: Mark Zuckerberg Blasts Biden’s Economy In Warning To Employees)
Two of Snap’s top sales executives are leaving the platform to join Netflix, Inc., reportedly to help build out the streaming platform’s ad business amid plummeting subscriptions and revenue loss. Senior vice president of Snap’s engineering department, Jerry Hunter, will be promoted to chief operating officer to help navigate and coordinate the company’s departments through these rapid changes, Reuters noted.