Snap's growth cracked… then its stock popped. Snap, the social giant responsible for popularizing disappearing messages, is cutting 20% of its 6K+ employees. CEO Evan Spiegel said the self-described camera company may suffer slow revenue growth into next year. To cut costs further, Snap’s scrapping: the "Pixy" photo drone, Snap Originals premium shows, and Snap Games. The stock soared as much as 15% after the news. Meanwhile: Netflix just swiped two Snap execs to lead its fledgling ads biz (awk).
The social biz sours… as the ads meal ticket sags. Snap's not the only social staple feeling the pain. Meta froze some hiring in May, and in July reported yet another quarter of declining sales as Facebook ads slump. Twitter "significantly" slowed hiring, laid off 30% of its recruiters in July, and last month told employees their bonuses are at risk. A few things eating into ad revenue:
- iOMess: Apple's iOS privacy push made profitable ad targeting a lot harder.
- Economean: #Flation and rising interest rates cut into advertisers' budgets.
- TikToffed: Competition from TikTok means a smaller slice of the ad-spend pie.
Socials are going basic… because times are complicated. Nice-to-haves like camera drones and original content may be top priorities when the cash is flowing, but as the economic outlook darkens, social cos are cutting back. In the hypercompetitive tech world, slashing innovation today risks irrelevance tomorrow — a fact likely on Meta's mind as it chugs full steam ahead into the metaverse (at least it has $40B in cash reserves to fall back on).