FTI Consulting News Bytes – 2nd September 2022

This week’s news

Snapchat shakes-up its ranks amidst a slump in advertising demand

Reports that Snapchat is planning to lay off 20% of its 6,500-strong workforce have emerged this week as the social media giant battles a decline in advertising demand, The Financial Times writes. The Company rapidly expanded its headcount during the pandemic, as was the case with many tech firms, however, with ever-increasing inflation and the wider economic slowdown, it has had to seek out cost-cutting measures. It isn’t just small fish on Snaps radar, it is cutting out the big players. Chief Business Officer, Jeremi Gorman, and Vice-President of ad sales, Peter Naylor, are both leaving as part the reshuffle. Both will be moving to Netflix, with Gorman joining as President of worldwide streaming. Year-to-date, Snap have lost nearly 80% of their value, with the Company issuing a profit warning in May, and posting bleak second-quarter results in July.  Snap argues that the tough macroeconomic climate has forced advertisers to slash their budgets, which has ultimately pushed them to undergo an immense internal restructure of its ads team.

Pretty Little Thing’s new Marketplace isn’t looking too pretty

After great anticipation, e-commerce fashion giant, Pretty Little Thing, this week launched its new ‘Marketplace’ offering. In an attempt to position themselves as more environmentally conscious players, they have introduced an app for customers to buy and sell second hand clothes, including their own pre-loved PLT garments. The launch has been met with understandable criticism, with sustainability influencers and authors telling Huffington Post that this is simply another form of greenwashing. The Twitter universe had a lot to say, with one user Tweeting “but the clothes are still unsustainably made”.  It is true, the concept doesn’t align with PLT’s fast-fashion business model – their products are trend-led, therefore created ultra-rapidly and are thus, of poor quality. They aren’t designed to be resold or have any longevity – so how viable really is the sustainability of such an offering, when the very clothes it has been built to re-sell, likely won’t have the lifespan to reach more than one owner, in one piece?

Sony snaps up savage Game Studios in console pivot

Sony announced on the 29th that it is acquiring the Finnish and German mobile game developer Savage Game Studios. Savage Game will be joining the newly created PlayStation Studios Mobile Division which will focus on creating games based on new and existing PlayStation IP. City AM reported Herman Hulst, Head of PlayStation said Sony “must continue to expand and diversify our offering beyond console” but that does not diminish its commitment to the PlayStation community or its passion to keep making single-player, narrative-driven experiences. This announcement shortly follows Sony’s acquisition of Bungie a gaming company for $3.6 billion.

Klarna’s losses quadruple as US push bites

The buy now pay later provider has revealed that it had seen losses more than tripled in the first half of the year. The Times highlighted that the large loss was due to the rising default costs and a costly push by the company into its biggest prospective market, the US. Klarna was a known lockdown champion in 2021, raising fresh capital which valued it at $45.6 billion in June 2021. Buy now pay later firms were valued highly before the pandemic with investors expecting them to perform well but those expectations are slipping amid the cost-of-living crisis and impending recession. Sebastien Siemiatkowski, the co-founder and chief executive, said the reduced valuation was because Klarna was raising capital “during possibly the worst set of circumstances to afflict stock markets since World War Two”.

Trump’s Truth Social App Blocked from Google Play Store

Truth Social, the social media platform backed by former US President Donald Trump has faced another hurdle this week in gaining access to the Google play store. According to Bloomberg, a spokesperson of Alphabet Inc said it had notified Truth Social of its violations and how to fix them on 19th of August. The cited reasons Google will not allow Truth Social on its app store is it has failed to show it offers “effective” moderation for user content and prohibits content such as physical threats. Trump Media and Technology Group have maintained that Truth Social is a family-friendly and vibrant community, which “has continuously worked in good faith with Google to ensure that the social media app complies with Google’s policies” without compromising its promise to be a haven for free speech.

Top Tweets of the Week

• Meta announces that users will now be able to post NFT’s on Instagram and Facebook and ask, “what NFT’s are you excited to share?”
• Erik Voorhees, Founder of the crypto platform, Shape Shift, shared an on the Central African Republic passing a bill that made Bitcoin legal tender – “Two countries have now made it legal tender. Who will be third? Who will be last?”
• Satya Nadella, Chairman and CEO of Microsoft Corp, on how Microsoft are powering the future of hybrid work – “We’re removing limits on how and where you work with Windows 11 and Windows 365. Together, they bring the power of Azure computing to Windows computers.”

Number of the Week

£48,247 – The highest salary the average young Brit expects to earn, ever

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