Snap Announces 1,000 Job Cuts Amid AI Adoption and Activist Pressure
- tech360.tv
- Apr 16
- 2 min read
Snap will lay off about 1,000 employees, representing 16% of its full-time staff, the company said. This move marks the latest instance of a technology firm shifting towards leaner teams as it increases artificial intelligence adoption to streamline operations. The reductions also include closing more than 300 open roles.
The company's decision follows weeks of pressure from Irenic Capital Management, which urged the Snapchat parent to optimise its portfolio and improve performance. The activist investor holds an economic interest of about 2.5% in Snap.
Advances in artificial intelligence are helping Snap streamline operations and operate with smaller teams. AI is generating more than 65% of new code, allowing the company to assign critical work to focused teams and AI agents. As of December, Snap had approximately 5,261 full-time employees.
Shares in the social media firm rose 5.8% after the announcement. The stock has fallen about 31% so far this year. Snap has invested heavily in its augmented reality glasses unit, Specs, and plans to launch the product this year.
However, Irenic Capital has called for Snap to spin off or shut down the cash-burning Specs business, citing more than USD 3.5 billion in investment. The firm has also advocated for broader cost cuts across the company.
"Cutting costs may appease an activist in the near term, and give long-suffering shareholders some relief, but whether it really leaves the company with a defensible business model and competitive position that it can defend, develop, and turn into profits and cash flow is still unclear," said Russ Mould, investment director at AJ Bell.
Snap expects to cut more than USD 500 million in annualised expenses by the second half of this year. Chief Executive Officer Evan Spiegel said these savings would be driven significantly by the recent layoffs, alongside broader efforts to reduce operating costs and stock-based compensation. Spiegel asked North America employees to work from home on Wednesday.
Artificial intelligence is reshaping the workforce by automating routine tasks, according to data aggregator Layoffs.fyi. Eighty technology companies have cut about 71,440 jobs so far this year due to this trend.
Snap anticipates first-quarter revenue to rise about 12% to roughly USD 1.53 billion, which is largely in line with Wall Street expectations, according to data compiled by LSEG. The company declined to comment on whether preliminary results include revenue from the USD 400 million Perplexity deal, announced last year.
Snap said in February that the companies "have yet to mutually agree on a path to a broader rollout" regarding the Perplexity deal. Despite its efforts, Snap has underperformed rivals in recent quarters, a trend advisory firm Madison and Wall does not expect to reverse.
The company forecast adjusted core profit of about USD 233 million for January-March, higher than Wall Street expectations of USD 186.8 million. It expects USD 95 million to USD 130 million in layoff-related charges, primarily in the second quarter, a regulatory filing showed.
Snap is scheduled to report its quarterly results on May 6.
Snap announced approximately 1,000 job cuts, affecting 16% of its full-time staff.
The job reductions are driven by increased AI adoption for streamlining operations and pressure from activist investor Irenic Capital Management.
Snap anticipates over USD 500 million in annualised expense cuts by the second half of the year.
Source: REUTERS
