On Aug. 31, Snap Inc. said it would lay off 20% of its staff and close projects, including mobile games. The cuts will help the company save $500 million a year in expenses.

The company’s stock rose 15% in recent trading, which affected the sector. The shares of Facebook’s parent company Meta Platforms Inc., rose 5%, and Pinterest Inc. rose 6%.

Analysts and investors see Snap as an early indicator of trends affecting other social media platforms, as Snap is the first to report quarterly earnings or provide business updates.

Shares of the company, based in Santa Monica, California, fell 2.5% to $10 on Tuesday after The Verge first reported on Snap’s layoff plans and AdAge’s departure of two top advertising executives.

Revenue growth in the third quarter was 8% year-over-year, below the company’s expectations. If this growth rate continues, it will be Snap’s slowest revenue growth since the company went public in 2017.

Implications for Snap

Despite spending cuts in some areas, Snap will now face declining revenue growth and will have to adapt to the new market environment. Senior Vice President of Engineering Jerry Hunter will be promoted to chief operating officer, responsible for better coordination between the engineering, advertising and product sales teams.

The close collaboration between engineers and salespeople will potentially help improve targeting and influence advertising campaigns.

The restructuring of the ad sales division also includes three new president positions that will oversee the Americas, Europe, Middle East, Africa and Asia-Pacific regions.

They will also stop investing in the Pixy flying camera drone just a few months after it debuted in May.

Side note: Sprocket Games raises $5 million in investment.