The dramatic cuts follow a series of grim financial reports, which sent the company’s shares plunging in recent months.
Among the business areas the company will be pulling back from amid the cutbacks is company-funded original content. Instead, Snap will focus on content from partners and creators. It will also shift its “minis” and games efforts into “maintenance mode,” representing a “substantially reduced investment.” It is also ditching a flying drone camera, Pixy, and trim other hardware investments, as well as winding down stand-along apps Zenly and Voisey.
The company estimates a $500 million reduction in its annualized cash cost structure as a result of the cuts.
“Today we are restructuring our business to increase focus on our three strategic priorities: community growth, revenue growth, and augmented reality,” CEO Evan Spiegel said in a statement. “Changes of this magnitude are always difficult, and we are focused on supporting our departing team members through this transition. We are deeply grateful for their many contributions to Snap.”
Along with the other announcements, the company said it is promoting Jerry Hunter to Chief Operating Officer.
Snap had one of Wall Street’s most successful IPOs in 2017 but has been on a wild ride since. After a number of high-level defections and a poorly received update of the Snapchat app, its stock plunged below $5 at the end of 2018. But Spiegel regrouped and the company rode a wave of digital advertising spending, a trend helped by Covid, to hit new highs in 2021. Like many other digital purveyors of ad-backed products, though, it hit the rocks in 2022 as the economy worsened and as TikTok continued to surge in popularity.