Evan Spiegel this week sent a memo to your employees announcing that Snap is going to lay off about 1,000 people16% of the entire workforce, in addition to canceling 300 vacant positions that had yet to be filled.
Snap thus hopes to save more than $500 million in annualized costs starting in the second half of this year, although the cut is expensive in the short term, since it will have to pay between $95 and $130 million in compensation. Nevertheless, the stock rose 7% in response to the layoffs. The markets have been asking for them for a long time.
Why is it important. Snap’s is not a “normal” failure story. It’s much more interesting than that. It’s the story of a company that forever changed how we communicate online and yet has failed to build a profitable business on it. In 2025 it lost 460 million dollars, although it is true that in 2024 it lost more and in 2023 even more.
He has spent his 15 years of life in that dynamic. It still hasn’t closed a single complete year on a positive note.
The context. His paradox begins in 2013, when he launched Stories: photos and videos that lasted 24 hours, published before disappearing. A format that is common today but at that time groundbreaking. A format that freed people from the pressure of permanence, of the trail.
In August 2016, Instagram launched exactly the same thing, with the same name, and with much bigger muscle behind it. Within two months, Instagram had 100 million Stories users. It had taken Snapchat four years to reach that number. A year later it had already surpassed Snapchat.
Yes, but. The problem was not that they were copied. The problem was that Meta, TikTok and YouTube adopted the format with an advantage that Snap never had: data.
Meta and Google know who we are, what we buy, what interests us. Snap knows much less. That’s why their advertising converts worse, and advertisers pay less for it. A vicious circle.
- The coup de grace was Transparency Tracking AppApple’s privacy policy released in 2021, which sank tracking-based advertising models.
- Meta also sufferedbut Meta had the scale and ecosystem to absorb the impact. Not Snap, so its stock went from touching $83 to trading today around $6. A drop of more than 90% from its highs, in less than five years.
However, Snap has 946 million active monthly users, grows 12% in year-over-year revenue and has one of the youngest audiences on all platforms. The most coveted demographic for fashion and entertainment brands. It has cutting-edge augmented reality technology and also has Snapchat+, your paid subscription, which is growing well.
That is the contradiction that a thousand layoffs do not resolve:
- Cutting costs improves margins, but alone does not truly monetize a platform with almost a billion users when its audience is young and difficult to convert, and its competitors have ten times more resources.
- There is also an activist fund in the capital, Irenic Capital Management with 2.5%, which has been pushing for months exactly in this direction: cuts.
And now what. Spiegel speaks at memo to concentrate investments where monetization already works. That is, give up on markets that are difficult to grow and profitable (Spain has every chance to be one of them) and focus on more powerful ones, presumably in the style of the United States or the United Kingdom. Give up growth in search of sustainability.
Snap has been trying to solve an equation that others have solved at their expense for 15 years. These layoffs are bought time to keep trying.
Featured image | Shutter Speed
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