Snap Inc. (NYSE: SNAP) slightly up in pre trading session on Thursday as the CEO Evan Spiegel has stated that the firm is ready for a difficult turnaround period as it attempts to reinvent itself and revive sales growth at a time when digital advertising expenditure is under pressure. “We really need to focus on execution.” “It’s going to be challenging,” Mr. Spiegel said at the Code conference in Beverly Hills on Wednesday.
Despite the near-term issues that have led Snap’s stock to drop almost 85% in the last year, Mr. Spiegel said he is optimistic about the future of the company he co-founded. “I feel we are still a long way from attaining our full potential.”
Snap announced last week that it expects to lay off 20% of its workers owing to weakening market circumstances and revenue growth that has dropped from more than 40% at the start of the year to roughly 8% in the current quarter. “We don’t see a lot of things that make us optimistic, so we’ve got to significantly restructure our business,” Mr. Spiegel said at the event on Wednesday.
In addition to cutting off over 1,200 people, Snap said last week that it will discontinue numerous initiatives, including it’s newly introduced flying selfie-camera drone, after experiencing its weakest revenue growth in years in July. The business stated that it was prepared for a time of modest sales growth that may last into next year, and that the adjustments it is implementing should save it around $500 million in yearly costs.
In the face of an economic slowdown, technology businesses in general are adjusting their strategies. On Tuesday, Google CEO Sundar Pichai stated that the Alphabet Inc. CEO Andy Jassy stated that the business was decreasing the rate of its personnel expansion.
Snap has also stated that competition for the remaining ad expenditure has gotten increasingly fierce. This is due in part to the meteoric ascent of TikTok, China’s ByteDance Ltd.’s video-sharing software that has become a household brand in recent years.
Mr. Spiegel stated that the rate of TikTok’s growth surprised him. “I believe what nobody had imagined in the United States was the kind of investment that ByteDance put into the US market, and of course in Europe, it was just something that was unimaginable,” he added. “No startup in the world could afford to invest billions and billions and billions of dollars in user acquisition like that,” Mr. Spiegel remarked.
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