Netflix Poaches Two Key Officials From Snap As They Downsize Workforce Over Recession, Apple Privacy Concerns

Snap Inc SNAP, the parent company of the social media app Snapchat is restructuring and also losing key officials.

The planned downsizing to lay off around 20% of its workforce would significantly affect the team working on ways for developers to build mini-apps and games. It will also profoundly impact Zenly, the social mapping app.

The layoff will also affect Snap's hardware division, responsible for its AR Spectacles glasses and the Pixy camera drone. Snap pulled off its Pixy flying selfie camera's development less than four months after its launch. 

Snap also restructured its ad sales organization. Jeremi Gorman, chief business officer, and Peter Naylor, VP of ad sales for the Americas, quit Snap to join Netflix Inc NFLX, Reuters reports.

Gorman will join Netflix as president of worldwide sales, while Naylor will be VP of advertising sales starting September.

Snap's lost 80% of its market value since the beginning of 2022 and decided to slow hiring and cut costs. Snap also delivered dismal earnings for the second quarter and stepped back from providing the third quarter guidance.

The recession concerns and Apple Inc's AAPL privacy norms wreaked havoc on its business. Snap had hired aggressively during the pandemic, akin to its peers. Its employee count rose 38% between March 2020 and Q2 FY22.

Piper Sandler forecasted more downsides to the stock as competition and budget constraints weigh on its business.

The downsizing comes just weeks after Snap founder and CEO Evan Spiegel closed the deal — which was said to be in the works for nearly two years — on a $120 million mansion with his wife Miranda Kerr in Los Angeles.

Tech giants including Alphabet Inc GOOG GOOGL Google, and Meta Platforms Inc META are also looking to downsize the workforce lest they fail to meet the standards.

Price Action: SNAP shares are trading lower by 7.99% at $9.21 premarket on the last check Wednesday.

Photo by Souvik Banerjee from Pixabay