Snap said it will cut 16% of its staff / Photo: Matthew Nichols1 / Shutterstock.com
The company that owns popular messenger Snapchat said it will cut 1,000 positions and close 300 posted jobs as it seeks to cut costs and use artificial intelligence to boost productivity, Reuters reports. AI already allows it to eliminate routine tasks and work in smaller teams, Snap said. The company's shares soared nearly 10% on the New York premarket, up 6% at the open. Quotes are down more than 30% since the beginning of the year.
Details
In total, the company will optimize about 16% of its workforce, which will cut annual expenses by $500 million, CEO Evan Spiegel said in a memo to employees, as quoted by CNBC.
"I said last fall that Snap is at a tipping point that requires a new way of working - faster and more efficient, while turning around profitable growth," Spiegel wrote, "We believe that the rapid evolution of artificial intelligence is enabling our teams to reduce chores, increase speed, and better support our community, partners, and advertisers.
In an investor presentation, the company noted that it is facing pressure from both large players with more resources and fast-growing startups. In a highly competitive environment, it intends to increase profitability through "AI-driven transformation." The platform plans to outsource tasks to small, highly specialized teams while empowering AI agents, which already generate more than 65% of new code and process more than 1 million requests per month, Snap's CEO said.
The company also said it expects total revenue in the first quarter to grow 12 percent to $1.53 billion, broadly in line with analysts' average forecast, according to LSEG data cited by Reuters.
Victory of an activist investor
The decision to make the cuts followed criticism from activist investor Irenic Capital Management, which has acquired about 2.5% of the company's shares and called for action to boost its valuation. He noted that the business has already absorbed more than $3.5 billion in investments and burns through about $500 million in cash annually. Irenic recommended that the company optimize operations, including through layoffs, as well as abandoning the production of augmented reality glasses.
Snap is investing heavily in its Specs subsidiary, which develops smart glasses, and is preparing to bring the product to the consumer market this year, but it is being led by larger competitor Meta, Reuters explains. The activist investor has called on Snap to spin off Specs into a separate company or shut down the business.
This article was AI-translated and verified by a human editor
