The owner of messaging and photo sharing app SnapChat will cut 20 per cent of its staff amid a downturn in the digital advertising market.
Los Angeles-based Snap is also scrapping plans to create videos and games as well as other initiatives such as augmented reality glasses.
The mammoth shake-up and cuts to its 6,500-strong workforce came as boss Evan Spiegel said it needed to reduce costs to avoid ‘significant losses’ after revenues in its current quarter were growing at just 8 per cent year-on-year, the slowest pace since it floated in 2017.
Sack chat: SnapChat-owner Snap will cut 20% of its staff amid a downturn in the digital advertising market
‘We must now face the consequences of our lower revenue growth and adapt to the market environment,’ Spiegel told employees.
The restructuring was cheered by the market, with shares up 8.7 per cent to $10.88 on Wall Street.
Snap boomed during the pandemic as users went online to stay connected during lockdown.
It invested in more staff and backed start-ups developing technology but high inflation and a slowdown in the global economy have sent shares in tech firms tumbling.
Snap’s stock has lost nearly 77 per cent of its value this year after a profit warning in May, followed by grim results for its second quarter in July.
It has also been hit by advertisers tightening their budgets, and changes to user privacy policies by tech giant Apple which have made it harder for apps to target users and measure the success of campaigns.
