Snap Inc. is slashing 20% of its workforce according to a memo from CEO Evan Spiegel.
The parent company of Snapchat will also slow down investments as its quarterly revenue of 8% falls below forecasts.
In fact, Bloomberg data shows that since going public, Snap has never reported a single-digit quarterly revenue growth. However, shares in premarket trading grew at around 10%.
Still, shares have fallen 78.7% this year, marking its worst year since going public in 2017. As a result, investor confidence is waning.
“While we will continue our work to reaccelerate revenue growth, we must ensure Snap’s long-term success in any environment,” said Spiegel.
In an effort to decrease their expenses, the company will discontinue or greatly reduce investments in these areas:
- Snap Originals
- Spectacles, its smart camera glasses development
Spiegel has yet to forecast its revenue for the year, it hopes that restructuring the company will allow it to generate free cash flow next year. Overall, Snap is predicting to reduce annual and operating costs by around $500 million.