US-based global social media firm Snap announced Wednesday that it will cut 20% of its workforce, around 6,400 employees, in a major restructuring move due to financial challenges.
CEO Evan Spiegel said the company has built capital reserves and reducing spending in some areas to avoid reductions in its workforce, but added "we must now face the consequences of our lower revenue growth and adapt to the market environment."
"Changes of this magnitude are never easy, and we must act decisively to meet this moment as a team," he said in a statement. "The extent of this reduction should substantially reduce the risk of ever having to do this again."
Spiegel noted that the company has also decided to discontinue investments in Snap Originals, Minis, Games, and Pixy, while it has started the process of winding down the standalone applications Zenly and Voisey.
Snap saw a net loss of $422 million in the second quarter of this year, compared to $152 million in the same period of last year, according to its financial results released on July 21.
It posted an operating cash flow of minus $124 million and a free cash flow of minus $147 million for the April-June period.
The company's shares plummeted around 25% after the financial results' release in July.
After the announcement of the restructuring, Snap's stock price was up 9.1% to $10.92 per share on the New York Stock Exchange at 1.30 p.m. EDT on Wednesday.
