Snapchat is cutting spending and employees amid a big stock fall.
The CEO of Snap Inc., Snapchat’s parent company, announced to staff that the company will be going through a major restructuring.
The restructuring plan aims to save $500 million in the next quarter by reducing 20% of the company’s employees and pulling back on products.
Some departments at Snap will be hit harder than others. Reports say a major loss will be within the team working on ways for developers to create mini apps and games within the app and the hardware division of the app.
Why it’s news
Snap has lost nearly 80% of its market value since the beginning of this year. In January Snap’s stock was sitting at nearly $47 per share. Today it is at $10.
Snapchat rose very quickly in its early days, but investors believe the recent fall is due to increased competition in the market as well as other factors like inflation causing ad sales to drop.
Snapchat has been adding many new investments over the years, such as its small original shows on the platform, games, and new selfie tools. In the company’s effort to streamline costs, it will also be cutting back on these recent investments.
Snapchat will continue with deals already made, but will not be making any new investments. It also noted that it will keep shows that are self-funded like NBC News’ Stay Tuned show.
Backing up a bit
Snapchat recently hired a head of safety control to its platform, in an effort to commit to safety and privacy.
The company hired Jacqueline Beauchere to be its first-ever global head of platform safety. Beauchere was previously the chief online safety officer at Microsoft.
In the role as head of safety, Beauchere will oversee all of Snapchat’s efforts around safety. She will also help advise on the development of new policies and guidelines, features, and tools around safety and well-being.