Snapchat jobs will be reduced by 5%
As a result of the reorganization, which was anticipated following a year of subpar financial outcomes, around 1,200 staff would lose their employment.
A year ago, the corporation had a $130 billion (112 billion) value. It is now only worth around $20 billion (£17 billion).
According to Snapchat, the cost savings would amount to around $500 million (430 million). The company’s CEO described the adjustments as “tough.”
Despite cutting down in certain areas, Snapchat’s CEO Evan Spiegel stated that the company must now “face the repercussions of our weaker revenue growth and adjust to the market climate.”
Mr. Spiegel claimed he intended to direct attention toward the business’s traditional source of revenue, advertising.
It entails the abandonment of initiatives like mobile game development and Pixy, a tiny drone made specifically for taking selfies.
Since advertising accounts for the large bulk of their revenue, social media businesses like Snapchat, Meta, and Twitter have all had recent difficulties.
However, a lot of advertisers are hesitant to spend due to high prices and concern over the status of the global economy.
Snapchat has been impacted by Apple’s privacy improvements from last year. The modifications have made it more challenging for advertisers to monitor consumers on their phones, which results in less targeted advertising.
Because they have such a wealth of user data, social media businesses are able to charge so much to marketers. Advertisers are less ready to invest without that knowledge.
The owner of Snapchat is hurt by declining sales from advertising
The business reported that several of its advertisers had reduced their expenditures due to growing expenses, supply chain problems, and labor constraints.
The company said that economic difficulties, changes to iPhone privacy settings, and fiercer competition for advertising have “significantly hampered” its revenue growth.
By the end of June, though, Snapchat had 347 million daily active users, exceeding expectations. It said that going forward, it wants to hire fewer people, expand its advertising business, and create new revenue streams.
Shares of significant technology companies that also sell online advertisements, including Meta, Alphabet, Twitter, and Pinterest, fell in after-hours trading on the report.
Snap’s earnings beat those of bigger competitors like Twitter, which will announce their results later on Friday.
Typically, Snap releases its financial results before Twitter, Meta, and Google. They thereby provide a glimpse into the whole sector’s health.
There is an issue if Snap’s quarterly results are any indication. Social media businesses operate on a relatively straightforward basis. They generate money by selling advertisements even if the product is free.
However, advertisers aren’t swarming to Snapchat. In fact, they definitely exude anxiety.
When individuals aren’t spending as much as they once did, the economy is frequently in trouble. But there are also other elements at work.
Apple adopted standards that allow customers to reject personalized adverts last year.
That has had terrible effects on companies like Snap, who for years have demanded exorbitant fees from marketers for the right to target their consumers.
Additionally, the older generation of social media firms is suffering as a result of TikTok’s remarkable popularity since they are losing users to the Chinese-owned site.