Troubled social media firm Snap has laid off staff in a bid to cut costs, according to reports.
Snap has laid off around 24 people, mostly in its content team, which is being centralised at the company California HQ.
Previously some of the team were based in New York, according to specialist tech news site The Information.
It's the latest in a series of staff cuts that started last year, with a number of lay-offs in its hardware and recruiting teams.
Hard to monetise
The news comes just days after analyst Aaron Kessler at US research firm Raymond James downgraded the stock from perform to underperform.
Kessler says there are five main issues with Snap:
- As a messaging-based app, it is hard to monetise
- Its new Discover platform – the best opportunity to grow revenue – is struggling to gain traction, with only one in five Snapchat users trying it out
- While Snap has a lead among fickle teenage users, it is struggling to attract older users
- The platform is unappealing to advertisers
- Snap’s stock is overvalued
Need to diversify
“If Snap cannot diversify away more from its core chat service, then we believe the stock’s valuation will contract,” Kessler said in the note.
Furthermore, according to the recent Raymond James Millennial survey, 54% of Snapchat users expect to use the app less as they get older.
Snap’s share price fell 7.5% to $13.50 in the five days following the Raymond James downgrade.
Snap went public in March 2017 at $17 per share, and by the following day had hit $29.44 – a 73% increase – but has struggled ever since.
Many of Snap’s best features have been adopted by Instagram, now owned by Facebook – Snap has 166 million daily active users, while Instagram has 250 million.
Snap is in planning an app redesign, which is worrying advertisters, according to The Information.