US social media company braces itself for a tough winter by laying off 20% of staff

Snap Inc. announced that it plans to fire a fifth of its workforce and close some of the key projects, including Pixy, Zenly and Voisey projects, as well as mobile games and novelties like a flying drone camera. 

The company reasons that this is done to hedge itself against the increasing inflation and generally deteriorating economic conditions. They believe the cuts would help it to save $500 million. 

Following the news, Snap’s shares plummeted by 15%. Subsequently, Meta’s shares rose 5% and the shares of Pinterest increased by 6%.

According to company representatives, this step will enable the company to focus on increasing its sales and existing user base, thus demonstrating clear and defining action to the company’s investors. 

Due to the fact that Snap is the first of the tech companies in the quarter to report their earnings, analysts wonder whether this could be the beginning of a wider social media company cost-cutting wave.

The company already warned investors in May that it may miss its revenue targets for the quarter, which resulted in a social media stock sell-off.