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snapThe company’s stock rose about 7% on Wednesday after the company announced plans to cut up to 16% of its global workforce due to AI-driven efficiencies.
CEO Evan Spiegel said in a letter to employees that the layoffs will affect about 1,000 employees and will eliminate at least 300 vacancies. .
Snap, the parent company of the popular messaging platform Snapchat, plans to reallocate resources to its top priorities, including improving its bottom line profitability.
“Last fall, I explained that Snap was facing a melting pot moment, requiring new ways of working that were faster and more efficient while pivoting toward profitable growth,” Spiegel wrote.
“We believe rapid advances in artificial intelligence will allow our team to reduce repetitive work, increase speed, and better support our communities, partners, and advertisers,” Spiegel added.
“We are already seeing small teams leveraging AI tools to drive meaningful progress across several key initiatives, including Snapchat+, enhancing the performance of our advertising platform, and improving the efficiency of our Snap Lite infrastructure.”
The company said in an investor presentation that it was being squeezed by larger companies with greater resources and faster-moving startups. In the face of increased competition, Snap said it aims to increase profitability through “AI-driven transformation” by enhancing workflows and making teams smaller.
The social platform plans to empower its AI agents while allocating work to smaller, more focused teams. We reported that our AI agents are already generating more than 65% of new code and responding to more than 1 million queries per month.
“As we continue to pivot towards profitable growth, we have announced organizational changes to better align our resources behind our top priorities,” a Snap spokesperson told CNBC in an email.
“While these decisions are extremely difficult, we are committed to supporting our colleagues who are leaving Snap through this transition.”
Shareholder Irenic Capital Management sent a letter to Mr. Spiegel last month recommending sweeping changes that would boost the stock price by nearly 600%.
The proposal included laying off 1,000 employees, representing 21% of Snap’s workforce.
“AI can and should replace many existing roles,” Irenic wrote in the letter. block and Uber.
Restructuring costs in the second quarter are expected to be approximately $95 million to $130 million, and the layoff process is expected to continue into the third quarter and beyond, as role reductions are subject to local legal requirements.
Spiegel said the job cuts will reduce the company’s annual cost base by more than $500 million by the second half of 2026. Snap expects first-quarter sales of $1.5 billion, an annualized increase of 12%.
U.S. staff members will receive an email notification within the hour regarding next steps. You can also expect to receive a four-month severance package that includes medical insurance, stock vesting, and career transition support. Snap’s North American team was asked to work from home.
CNBC’s Lola Murti contributed to this article.
