Snap shares are moving higher on Wednesday afternoon after previously dropping amid news of plans to lay off 20% of its staff.

Video Transcript

DAVE BRIGGS: My play is Snap, one of the stories of the day, surging on those plans to lay off 20% of its 6,400 employees. Their CEO Evan Spiegel made the announcement today saying the social media company is restructuring to focus on three strategic priorities-- community growth, revenue growth, and augmented reality. Not only will they lay off 1,200 workers, Snap also cutting plans for original shows, in-app games, and of course, we've talked about this, the camera drone is gone.

Snap shares down more than 75% year to date after a dismal earnings report. Ray Wang was in studio with us yesterday and told us yesterday that this really fits the overall narrative he saw in the entire sector in Q2.

RAY WANG: We've learned that social sucks. And social doesn't hold it anymore.

DAVE BRIGGS: Short, but sweet. And he's right. And you look across the board now. It sucks because of course, no one can invest in the king of all social media, which is TikTok, a privately owned company, until ByteDance goes public in China. So other than that, the story is bleak. Snap shares, though, up today on this news. People like to hear that they're making the cuts that they have to. 347 daily active users is nothing to sneeze at, Rachelle. Far more than Twitter, so you might argue there is a light at the end of the tunnel here.

RACHELLE AKUFFO; I mean, like you were saying, this sort of change, it does reassure investors. We heard from analyst Paolo Pescatore from PP Foresight. He said its clear and defining action to refocus its business has reassured investors. And of course, Snap usually reports its earnings ahead of other social media companies.

So when you sort of get these sort of notes, you do sort of wonder, what does that mean for these other social media companies as well? They also talk-- Spiegel also talked about this 8% annual revenue growth. And potentially, if that holds, that would actually be the slowest growth since it went public in 2017. So really trying to find some positives here. A little bit tough, though, for Snap right now, Seana.

SEANA SMITH: Yeah, I think there's a lot of questions that remain unanswered. You mentioned maybe a positive spin that the Street has on these cuts. Well, Ron Josey at Citi, he actually downgraded the stock from buy to neutral today, citing, quote, "continued monetization headwinds and execution risk." We also had those two ad executives leaving Snap for Netflix, two key employees here just in terms of the reaction that we've heard from some of the analysts today on the Street, what that could potentially mean for their business.

More executives just in terms of the exit that we've seen from Snap here, the changeup that we've seen in some of those higher rank positions at the company. So certainly, I think that maybe today's announcement from Snap could be viewed as a step in the right direction. But I think a lot of changes need to happen down the road.

DAVE BRIGGS: Yeah, shares up 9% on this news. The investors like the story. But to your point, I think losing the execs in Netflix could actually be a bigger blow. And I don't mean to sound heartless about losing 20% of employees. But they almost doubled their headcount in the pandemic. So they got probably a bit too bloated based on that boost they saw in 2019, 2020. So this, you could have seen coming based on how much they grew in a very short period of time. Losing top execs in Netflix is going to be very tough.