Snapchat will cancel a number of new projects and lay off 20% of its workforce.
As a result of the restructuring, which was anticipated following a year of subpar financial outcomes, around 1,200 staff would lose their employment.
A year ago, the corporation had a $130 billion (112 billion) value. It is now only worth around $20 billion (£17 billion).
Snapchat said the cuts would help the company save an estimated $500m (430m) in annual costs. The company’s CEO said the changes would be “difficult”.
Despite reducing spending in some areas, Snapchat must now “face the consequences of our lower revenue growth and adapt to the market environment,” its CEO Evan Spiegel said.
Mr Spiegel said he wanted to focus the company’s attention on its traditional lifeblood – making money from advertising.
It means the jettisoning of projects like mobile games and Pixy, the small drone designed to take selfies.
Social media companies like Snapchat, Meta, and Twitter have all struggled recently as the vast majority of their revenues are based on advertising.
However, high inflation and nervousness around the state of the global economy have left many advertisers reluctant to spend.
Snapchat has also been affected by privacy updates by Apple – introduced last year.
The changes have made it more difficult for advertisers to track people on their phones – which makes targeted adverts less focused.
The reason why social media companies can charge so much to advertisers is that they hold so much information about their users. Without that information, advertisers are less willing to spend.