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Snap is cutting 20% ​​of its workforce and restructuring

Snap, maker of the ephemeral messaging app Snapchat, is laying off 20% of its workforce, ending at least six products and naming its first chief operating officer in seven years, the financially troubled social media company said on Wednesday.

The cuts are expected to affect nearly 1,300 of Snap’s 6,400 employees, the company said. Snap is shutting down its division that produced exclusive short-form shows with celebrities and other influencers, as well as its social mapping app Zenly; its music-making app, Voisey; and hardware including his Pixy drone camera.

At the same time, Snap said it is appointing Jerry Hunter, senior vice president of engineering, to the role of chief operating officer. Hunter will become No. 2 to Evan Spiegel, who is Snap’s founder and CEO. The role of Chief Operating Officer has been vacant since 2015.

In an email to employees on Wednesday, Spiegel blamed tough macroeconomic conditions for forcing his hand.

“While we continue our work to reaccelerate revenue growth, we must ensure Snap’s long-term success in any environment,” he wrote. He added: “I deeply regret that these changes are necessary to ensure the long-term success of our business.”

Snap’s layoffs were previously reported by technology news website The Verge.

Snap, which is popular with teenagers and young adults and has more than 347 million active users worldwide, has struggled for months. Apple’s privacy changes have affected its advertising business, and rising inflation and economic uncertainty have left advertisers scrambling.

In July, Snap reported its slowest quarterly growth rate since going public in 2017 and said it would “significantly reduce” its hiring pace. It also declined to forecast its financial performance for the current quarter due to “uncertainties related to the operating environment”. Snap’s stock price is down nearly 80% since the start of the year.

Many social media companies are struggling with the prospect of a recession. Meta, the parent company of Facebook and Instagram, and Twitter have also slowed their hiring in recent months. But Snap, like Twitter, is particularly vulnerable to economic shocks because it’s a smaller social media company and relies heavily on one main way to make money.

“When the economy starts to slow down, advertising budgets are stretched,” said Brent Thill, an equity analyst at Jefferies. “Advertisers tend to go to proven platforms like Google or Amazon where the wallets are.”

Some of Snap’s executives have left. Its chief commercial officer, Jeremi Gorman, and its VP of Americas sales, Peter Naylor, recently left for Netflix. Their departures were previously reported by The Verge.

Spiegel said the extent of the layoffs would “vary from team to team.” He said the scale of the cuts will also “significantly reduce the risk that we will ever have to do this again”. The company said it expects to save $500 million through the restructuring.

The projects and products that Snap is ending were launched so that the company could better compete with its competitors and attract creators to the platform. Apps like Zenly and Voisey, which run independently of Snapchat, have been pitted against Instagram and TikTok.

Spiegel said in his email that Snap will focus more on three areas: community growth, revenue growth and augmented reality. He said the company will continue to invest in these priorities.

Spiegel also said that Snap’s current quarter revenue rose 8% from a year earlier, which was “significantly below” what the company expected earlier this year, but an improvement over “roughly flat” revenue growth at the start of the quarter in in July.

Snap and other social media companies also continue to face scrutiny from lawmakers and regulators for exposing young users to potentially harmful content that some say can exacerbate eating disorders and mental illness. Snapchat launched its first parental controls in August.

This article originally appeared in The New York Times.

Sanjit
Sanjit

I am Sanjit Gupta. I have completed my BMS then MMS both in marketing. I even did a diploma in computer software and Digital Marketing.

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