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Heard on the Street Blog

Snapchat's Advertising Business Has Matured, But Losses Keep Mounting

Snap Inc., the parent company of Snapchat, is reportedly set to layoff 20% of their employees, putting 1,200+ people at risk of losing their jobs. Snap's core business — selling ads — has matured significantly in the last 7 years. In 2015 the company made just a few cents from every user, but last year they made more than $3 per quarter for each active Snapchatter. That growth took Snap to more than $4bn a year in revenue, but other projects and runaway expenses have seen the company notch a net loss in 29 of the last 30 quarters.

Out of focus‍

‍Snap has been spending big on other projects, many of which appear likely to bear the brunt of the impending layoffs. The company's AR smartglasses, Spectacles, received heavy investment as did Pixy — the company's camera drone which was discontinued after just a few months. Both fell under Snap's grand plan to reinvent the camera — an ambition that so far has contributed to a cumulative net loss of $8.9 billion since 2015. Snap is not the first, and certainly won't be the last, tech company to announce layoffs. Ad giant Facebook saw their ad business shrink for the first time last quarter, and spending on digital ads is likely to continue to soften if the economic headlines remain as gloomy as they have been.