Snap to cut 20% of staff, cancel Pixy, Zenly, Voisey projects in cost-cutting effort

Two of Snap's top ad sales executives - Chief Business Officer Jeremi Gorman and Vice President of ad sales Peter Naylor - are leaving to join Netflix Inc. and build the streaming service's ad business

Snap Inc. said on Wednesday it will lay off 20% of all staff and shut down projects, including mobile games and novelties like a flying drone camera, as high inflation and a deteriorating economy ravage the advertising industry.

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The cuts will help the company save an estimated $500 million in costs annually, Snap said.

Snap shares rose 15% in morning trading, which reverberated across the sector. Shares in Facebook parent Meta Platforms Inc. were up 5% and Pinterest Inc. rose 6%.

The company said it will focus on improving sales and the number of Snapchat users.

The "clear and defining action" to refocus its business has reassured investors, said Paolo Pescatore, an analyst at PP Foresight.

Analysts and investors have viewed Snap as an early indicator for trends affecting other social media platforms, as Snap is usually first to report quarterly earnings or provide business updates.