{"id":162971,"date":"2022-08-31T15:27:59","date_gmt":"2022-08-31T15:27:59","guid":{"rendered":"https:\/\/precoinnews.com\/?p=162971"},"modified":"2022-08-31T15:27:59","modified_gmt":"2022-08-31T15:27:59","slug":"snap-to-cut-20-of-staff-cancel-projects-in-cost-cutting-effort","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/markets\/snap-to-cut-20-of-staff-cancel-projects-in-cost-cutting-effort\/","title":{"rendered":"Snap to cut 20% of staff, cancel projects in cost-cutting effort"},"content":{"rendered":"
(Reuters) -Snap Inc said on Wednesday it will lay off 20% of all staff and shut down projects, including mobile games and novelties like a flying drone camera, as high inflation and a deteriorating economy ravage the advertising industry.<\/p> The cuts will help the company save an estimated $500 million in costs annually, Snap said.<\/p>\n Snap shares rose 15% in morning trading, which reverberated across the sector. Shares in Facebook parent Meta Platforms Inc were up 5% and Pinterest Inc rose 6%.<\/p>\n The company said it will focus on improving sales and the number of Snapchat users.<\/p>\n The \u201cclear and defining action\u201d to refocus its business has reassured investors, said Paolo Pescatore, an analyst at PP Foresight.<\/p>\n Analysts and investors have viewed Snap as an early indicator for trends affecting other social media platforms, as Snap is usually first to report quarterly earnings or provide business updates.<\/p>\n Snap\u2019s warning in May that it would miss its revenue targets due to worsening economic conditions sparked a sell-off in social media stocks.<\/p>\n Shares in Santa Monica, California-based Snap closed down 2.5% at $10 on Tuesday after The Verge first reported Snap\u2019s plans for layoffs, and AdAge reported the departure of two top advertising executives.<\/p>\n Revenue growth so far in the third quarter is up 8% from the previous year, which is \u201cwell below what we were expecting\u201d, Chief Executive Evan Spiegel wrote in a memo to employees that was also released publicly on Wednesday.<\/p>\n If that growth rate holds, it would be the slowest revenue growth Snap has had since becoming a public company in 2017 – a far cry from triple-digit growth rates it has recorded in previous quarters.<\/p>\n Two of Snap\u2019s top ad sales executives – Chief Business Officer Jeremi Gorman and Vice President of ad sales Peter Naylor – are leaving to join Netflix Inc and build the streaming service\u2019s ad business.<\/p>\n Gorman, a longtime advertising executive who previously worked at Amazon, was instrumental in building Snap\u2019s ad business, said Jasmine Enberg, principal analyst at research firm Insider Intelligence.<\/p>\n Gorman and Naylor\u2019s departures come after Snap reported a disappointing second quarter, and it is facing more competition from TikTok, she said.<\/p>\n \u201cSnap is clearly going through a tough time,\u201d Enberg said.<\/p>\n \u2018FACE THE CONSEQUENCES\u2019<\/p>\n Despite reducing spending in some areas, Snap must now \u201cface the consequences of our lower revenue growth and adapt to the market environment\u201d, CEO Spiegel wrote in the memo.<\/p>\n Senior vice president of engineering Jerry Hunter will be promoted to chief operating officer and will be responsible for improving coordination between engineering, ad sales and product teams, Spiegel said.<\/p>\n Snap and other social media platforms including Meta have all suffered from privacy updates that Apple Inc introduced on iPhones last year.<\/p>\n These have made it difficult for digital ad sellers and advertisers to target ads to relevant audiences and measure their sales results.<\/p>\n Closer collaboration between engineering and sales could potentially help Snap improve targeting and measurement of its ads.<\/p>\n The restructuring of the ad sales division also includes three new president roles that will oversee the Americas, Europe, Middle East and Africa, and Asia-Pacific regions.<\/p>\n Snap will also discontinue investment in its Pixy flying drone camera, just a few months after its debut in May.<\/p>\n