snap inc SNAP Shares fell Wednesday morning after the company confirmed this reports that it planned to lay off about 20% of its employees. However, the stock reversed course and surged higher after the company announced restructuring plans.

What you should know: Snap planned to focus more on three new strategic priorities: community growth, revenue growth, and augmented reality. The company also highlighted its path to profitability and presented preliminary results.

Snap said its current quarter-to-date revenue growth is about 8% year over year, which is well below the company’s expectations, according to a memo CEO Eve Spiegel sent to employees on Tuesday.

“While we have built significant capital reserves and made extensive efforts to avoid downsizing our team by reducing spending in other areas, we must now face the consequences of our lower revenue growth and adapt to the market environment,” Spiegel said.

In Wednesday’s investor update, Snap said it would significantly reduce or completely eliminate all investments not directly related to the company’s three strategic priorities. Some areas where there will be cuts are Snap Originals, games, hardware (eyewear) and other standalone apps.

The company will increase its focus in several areas to create a clear path to profitability and free cash flow. Snap’s plans include the aforementioned 20% headcount reduction, efficiently scaling infrastructure costs, investing in content that drives community engagement, reducing marketing investments, and reducing real estate costs.

Snap anticipates that these strategic actions will result in an estimated $500 million reduction in its annualized cash expense structure compared to the second quarter.

Snap also noted that it has completed the $500 million buyback it announced along with its second-quarter earnings report. The company repurchased 3.1% of the outstanding shares at an average price of $9.75.

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