Snap cuts 20% of employees and restructures

NEW YORK (NYTIMES) – Snap, the maker of the ephemeral messaging app Snapchat, is laying off 20 per cent of its employees, discontinuing at least six products and appointing its first chief operating officer in seven years, the financially struggling social media company said on Wednesday (Aug 31).

The cuts are set to affect close to 1,300 of Snap’s 6,400 employees, the company said. Snap is closing down its division that produced exclusive short shows with celebrities and other influencers, as well as its social mapping app, Zenly; its music creation app, Voisey; and hardware including its drone camera, Pixy.

At the same time, Snap said it was appointing Jerry Hunter, a senior vice president for engineering, to chief operating officer. Mr Hunter will become the No. 2 to Evan Spiegel, who is a founder of Snap and its chief executive. The chief operating officer role had been vacant since 2015.

In an email to employees on Wednesday, Mr Spiegel blamed challenging macroeconomic conditions for forcing his hand.

Snap, which is popular with teenagers and young adults and has more than 347 million active users around the world, has struggled for months. Privacy changes from Apple have affected its advertising business, and rising inflation and economic uncertainty have made advertisers skittish.

In July, Snap reported its slowest-ever rate of quarterly growth since going public in 2017 and said it would “substantially reduce” its pace of hiring. It also declined to predict its financial performance for the current quarter because of “uncertainties related to the operating environment.”

Snap’s stock price has fallen more than 76 per cent since the beginning of the year.

Many social media companies are grappling with the prospect of a recession. Meta, the parent company of Facebook and Instagram, and Twitter have also slowed their hiring in recent months. But Snap, like Twitter, is especially vulnerable to economic shocks because it is a smaller social media company and relies heavily on one main way of making money.

Some of Snap’s executives have left. Its chief business officer, Jeremi Gorman, and its vice president of sales in the Americas, Peter Naylor, recently departed for Netflix.

Spiegel said the scale of the layoffs would “vary from team to team.” He said the extent of the cuts would also “substantially reduce the risk of ever having to do this again.” The company said it expected to save US$500 million (S$698.6 million) from the restructuring.