Snap restructures into small squads to counter slowing growth
Snap Inc., under CEO Evan Spiegel, is undertaking a significant internal reorganization aimed at increasing agility and innovation. The company announced it will break its workforce of around 5,000 employees into smaller “startup squads” consisting of 10 to 15 people. This strategy is designed to foster rapid development and better position Snap against larger rivals in the competitive social media landscape.
Advertising revenue growth stalls amid user decline
The restructuring follows disappointing financial and user metrics. Snap’s advertising revenue growth plateaued at 4% during the second quarter of 2025, signaling a stall in its primary income source. Additionally, daily active users in North America—Snap’s most critical market—declined by 2% to 98 million, raising concerns about user engagement and retention.
Subscription services and AR hardware emerge as growth drivers
Despite these challenges, Spiegel highlighted Snapchat+ subscriptions as a promising revenue stream. The premium service has amassed over 15 million paying subscribers and now generates more than $700 million in annual recurring revenue. This direct-to-consumer model represents one of Snap’s fastest-growing opportunities.
Moreover, Snap is intensifying investment in its augmented reality (AR) hardware, specifically the Specs AR glasses. Spiegel envisions these devices as part of a “once-in-a-generation transformation towards human-centered computing,” potentially replacing smartphones in the future. This aligns with similar moves by competitors such as Meta and Google, which have partnered with eyewear brands Ray-Ban and Warby Parker, respectively.
Market valuation reflects investor skepticism
Spiegel candidly acknowledged that Snap’s current stock price reflects investor doubts about the company’s trajectory. The market capitalization stands at roughly $12 billion, a steep decline of 90% from its September 2021 peak of $116 billion during the height of social media market enthusiasm. Nonetheless, Spiegel suggests the company retains “startup-style return potential” given its restructuring and growth initiatives.
FinOracleAI — Market View
Snap’s shift toward smaller, autonomous squads aims to inject innovation and speed into product development, which could help reverse user decline and ad revenue stagnation. The growing Snapchat+ subscription base and investment in AR hardware provide promising alternative revenue streams, though these remain nascent relative to advertising. Key risks include continued user attrition and competitive pressure from larger platforms. Investors should monitor user engagement trends and the commercial adoption of AR glasses as indicators of Snap’s turnaround potential.
Impact: neutral
