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Snap‘s shares jumped on Wednesday after the company announced plans to slash up to 16% of its global workforce, citing AI-driven efficiencies.
CEO Evan Spiegel said in a letter to staff that the reduction would affect around 1,000 members of staff and that at least 300 open positions would be closed. The stock was last up 10.9% in premarket trading.
Snap, the parent company of popular messaging platform Snapchat, is planning to reallocate resources to its highest priority initiatives, including increasing its net-income profitability.
“Last fall, I described Snap as facing a crucible moment, requiring a new way of working that is faster and more efficient, while pivoting towards profitable growth,” Spiegel wrote.
“We believe that rapid advancements in artificial intelligence enable our teams to reduce repetitive work, increase velocity, and better support our community, partners, and advertisers,” Spiegel added.
“We have already witnessed small squads leveraging AI tools to drive meaningful progress across several important initiatives, including Snapchat+, enhanced ad platform performance, and efficiency improvements in our Snap Lite infrastructure.”
The firm said it expects to incur charges between between $95 million and $130 million in the second quarter, mainly relating to severance, contract termination costs, and other impairment charges. It expects the layoff process to continue into the third quarter and beyond due to role elimination being subject to local law requirements.
Spiegel said that the layoffs would reduce the company’s annualized cost base by more than $500 million by the second half of 2026.
U.S. staff members are expected to receive email notifications within the next hour regarding the next steps, while Snap’s North American team was asked to work from home.
This is a breaking story; please check back for more updates.
