Snap Inc announced Wednesday that it would lay off 20% of its employees and discontinue operations for its innovations in mobile video games and flying drone digital cameras.
The company will instead focus on boosting revenue and user numbers to save an estimated $500 million in valuations as inflation and a worsening economy wreak havoc.
In a memo to employees released on Wednesday, CEO Spiegel said: “Despite reducing spending in some areas, Snap must now face the consequences of our lower revenue growth and adapt to the market environment.”
This has led analysts to believe that Snap will struggle to reach relevant audience and track sales results following the departure of key employees and Apple’s privacy updates.
Snap had warned back in May that it would miss its revenue targets due to worsening economic conditions, triggering a sale of social media shares, as third-quarter revenue growth of 8% was well below expectations. If this rate continues, Snap will experience its slowest revenue growth since the IPO in 2017, as opposed to the triple-digit growth rates previously.
The sources for this piece include an article in Reuters.