Snapchat, the inventor of the short-lived messaging app is laying off 20% of its employees and discontinuing strings of at least 6 new projects. Moreover, it is appointing a new chief operating officer amid the financial crisis the company is facing. This popular social media company is closing down its division which produced exclusive short shows with celebrities and other influencers. Likewise, it is closing its social mapping app – Zenly consisting of hardware called Pixy and a music creation app called Voisey.
Crucial Financial Crisis
Around 1200 employees of Snapchat will lose their jobs as a result of the poor financial framework. Snapchat has also experienced a fall in its stock prices up to 76% at the beginning of this year. Moreover, its revenue has risen to 8% more than last year, which is below the average expectations of the accounts and management team. The management blames ineffective macroeconomic conditions of the economy and unhealthy competition from rivals like Instagram and TikTok.
Focusing on the growth of the company, it is restructuring the substantial framework of the balance sheet and expecting to save $ 500 million. The company was worth $130 billion a year ago and is now valued at less than $20 billion. It wants to focus on community growth, augmented reality, and revenue growth. Snapchat CEO Evan Spiegel said, “Despite reducing spending in some areas, the company has to face the consequences of our lower revenue growth and adapt to the market environment.” Privacy policies of Apple are affecting Snapchat that are not allowing user’s data to share with social media company along with advertisers who are charging high for holding data.
Slowing Down Hiring Process
Snapchat reported its slowest-ever rate of growth since 2017 and would substantially reduce its pace of hiring. Hence, the company declined to predict its financial performance for the current quarter because of uncertainties related to the operating environment. Other social media companies like Facebook, Instagram, and Twitter are also trying to deal with the recession by slowing down their hiring process and diversifying ways of money-making. Speaking about the economic crisis, Brent Thill said, “When the economy starts to slow, advertising budgets get tight. Advertisers tend to rise to the proven platforms, like Google or Amazon, where the wallets are. ”