Snap, Inc., the parent company of the popular mobile messaging app Snapchat, will lay off more than 200 employees as part of its first round of layoffs. In addition to letting go workers at its Los Angeles headquarters, the company will reduce staff in international offices and those related to selling advertising, among other areas. The layoffs are expected to affect about 8% of Snap’s total workforce of 2,600. The news comes on the heels of revelations that Snapchat has turned down acquisition offers by Facebook and others totaling $3 billion since 2013, including one offer valuing the company at $4 billion or more last year.
After Snap verified rumours that it would be laying off 20% of its more than 6,000 employees and announcing the cancellation of many projects, including its Pixy photo-taking drone and its slate of Snap Originals premium series, its stock price increased by as much as 15%.
In a statement to staff members on Tuesday, CEO Evan Spiegel revealed the changes and explained that the firm must restructure its operations in order to address its financial difficulties. The 8% quarter-over-quarter sales growth rate for the firm, according to him, is “far below what we were expecting earlier this year.”
Although we have taken significant efforts to prevent lowering the size of our staff by reducing spending in other areas, Spiegel added, “We must now confront the implications of our reduced revenue growth and adjust to the market climate.” We are reorganising our company to put more emphasis on our three strategic priorities: augmented reality, revenue growth, and community expansion.
The business also abandoned its Snap Minis third-party applications and Snap Games initiatives. Spiegel said that Snap is also beginning the “process of shutting down” its acquired Voisey music function and Zenly navigation application.
Jerry Hunter has also been elevated by Snap to the position of chief operational officer from senior vice president of engineering. According to Spiegel, Hunter will keep running Snap’s technical department.
The business announced that it has appointed Ronan Harris, Google’s vice president and managing director for the United Kingdom and Ireland, to the newly created post of president of the Europe, Middle East, and Africa region. Harris will be a part of Snap’s management team.
According to Spiegel, Snap is now looking to fill two additional positions: presidents of the company’s Americas and Asia-Pacific regions.
Changes of this size are seldom simple, and to tackle this situation as a team, Spiegel added, “We must move decisively.” “I am pleased of the tenacity and resiliency of our team as we have faced the numerous difficulties of expanding our company in a fiercely competitive market amid unpredictable and unheard-of times,” the team leader said.
After the firm announced second-quarter earnings in July that failed on both the top and bottom lines and stated it would not offer guidance for its current quarter, Snap shares plunged more than 25%.
At the time, the corporation announced plans to “significantly” decrease both the rise of operational expenses and recruiting.
Like other social media firms like Twitter, Pinterest, and Facebook’s parent company Meta, According to Snap, a number of issues have combined to negatively affect the company’s bottom line. They include Apple and a deteriorating macroeconomic climate.
the iOS release of 2021, which made it more challenging for social media businesses to monitor users on behalf of outside advertising.
The growth of TikTok’s short-video service has also presented Snap and its rivals with a substantial challenge.
After rumours that the business was halting work on the gadget arose, Snap said that it was abandoning development of its Pixy drone. Users of the drone were intended to find it entertaining to snap pictures of themselves from various perspectives. Snap has been attempting to establish a consumer hardware company, and in April it unveiled a $230 drone.