STORY: Shares of Snap soared on Wednesday, after the maker of Snapchat said it will lay off 20% of all staff and shut down several investments, including mobile apps, video games and its selfie drone Pixy.
CEO Evan Spiegel delivered the news in a memo to employees, saying the move was to "avoid incurring significant ongoing losses.”
The billionaire also said Snap must now "face the consequences of our lower revenue growth and adapt to the market environment."
Spiegel said revenue growth so far in the third quarter was "well below what we were expecting" at a rate of 8% from the previous year.
If that holds, it would be the slowest revenue growth Snap has had since becoming a public company in 2017 - a far cry from triple-digit growth rates it has recorded in previous quarters.
Snap warned in May that it would miss its revenue targets due to worsening economic conditions, which sparked a sell-off of social media stocks.
The job cuts announcement reverberated across the social media sector, as shares of Meta Platforms and Pinterest also rose on the news.
Snap said the cost cutting will help the company save an estimated $500 million annually.