Snapchat will cancel a number of new projects and fire 20% of its employees. Following a year of subpar financial performance, it was anticipated that approximately 1,200 staff would lose their jobs in the restructuring.
A year ago, the corporation was worth $130 billion (or $112 billion). Less than $20 billion (£17 billion) is currently the estimated value.
According to Snapchat, the cost savings would total $500 million (430 million) a year. The company’s CEO characterised the modifications as “tough.”
Snapchat must now “face the repercussions of our weaker revenue growth and adjust to the market situation,” according to CEO Evan Spiegel while cutting back in some areas.
Mr Spiegel stated that he wants to concentrate the company’s efforts on its traditional source of revenue, advertising.
Projects like mobile games and Pixy, a tiny drone made specifically for taking selfies, will be abandoned as a result.
Due to the fact that the vast bulk of their income comes from advertising, social media businesses like Snapchat, Meta, and Twitter have all had recent difficulties.
But many advertisers are hesitant to spend due to high inflation and uncertainty regarding the condition of the global economy.
Apple’s privacy improvements from last year have an impact on Snapchat as well.
The modifications have made it harder for marketers to follow consumers on their phones, which results in less targeted advertising.
Because they have so much data on their customers, social media businesses are able to charge a lot. Advertisers are less eager to spend if they lack that information.