Snap will trim 20% of its workforce and end production of original series, a restructuring applauded by Wall Street Wednesday, which sent the company's stock up more than 8% as of midday NASDAQ trading.
In a memo to staff sent Wednesday, Snap CEO Evan Spiegel said that company management is “restructuring our business to increase focus on our three strategic priorities: community growth, revenue growth and augmented reality.”
Since 2017, Snap has been investing in original productions for the “Discover” section of its Snapchat app, but will now end that initiative. Earlier this year, Snap announced a new programming slate, featuring talent including Olympic gymnast Simone Biles and the social media influencer Charli D’Amelio.
And in a note to the Securities & Exchange Commission, Snap said it expects the cuts, which involve around 1,300 workers, to save the company around $500 million annually.
As a key part of the restructuring, Snap promoted Jerry Hunter, previously senior VP of engineering, to the position of chief operating officer, where he’ll lead monetization, growth, partnership and content initiatives.
Announcement of the trims came just after Snap’s two highest-ranking advertising executives, Jeremi Gorman and Peter Naylor, said they were leaving to work for Netflix.
Snap revenue growth flatlined in July, a dramatic deceleration from the nearly 40% growth rate the company was clocking before the Russian invasion of Ukraine, which Snap has viewed as particularly impactful to its bottom line.
“Unfortunately, given our current lower rate of revenue growth, it has become clear that we must reduce our cost structure to avoid incurring significant ongoing losses,” Spiegel wrote in the company memo. “While we have built substantial capital reserves, and have made extensive efforts to avoid reductions in the size of our team by reducing spend in other areas, we must now face the consequences of our lower revenue growth and adapt to the market environment.” ■
