AI Efficiency Drive: Snap Cuts 1,000 Jobs Amid Cost Optimization Push
Under pressure from an activist investor and amid increased adoption of artificial intelligence (AI), Snap has announced layoffs affecting 1,000 employees. On Wednesday (15 April), the company stated that 16 percent of its total full-time workforce will be impacted. Additionally, more than 300 vacant positions will be eliminated.
Just a few weeks ago, Irenic Capital Management urged Snapchat’s parent company to optimize its portfolio and improve performance. The firm holds an economic stake of approximately 2.5 percent in Snap.
Snap Chief Executive Officer Evan Spiegel said that through AI adoption and workforce reductions, the company expects to cut more than $500 million in annual costs by the second half of this year. Snap’s shares rose by 5.8 percent, although the company’s stock has declined by around 31 percent so far this year.
Snap noted that AI technology is helping streamline its operations and enabling it to function with smaller teams. Artificial intelligence is now responsible for generating more than 65 percent of the company’s new code. According to financial disclosures, the cost of the layoffs is expected to range between $95 million and $130 million, primarily to be incurred in the second quarter.
Irenic Capital is also pressuring Snap to shut down or sell its augmented reality glasses unit, ‘Spectacles’ (Specs). Snap has invested more than $3.5 billion in the Specs unit. Recently, The Wall Street Journal reported that Snap is in discussions with Elon Musk’s X regarding a potential sale of the unit.
According to Layoffs.fyi, AI-driven automation has led around 80 technology companies to lay off approximately 71,440 employees so far. Last month, Meta announced plans to cut about 20 percent of its workforce, while Amazon decided to reduce its management layers.
Snap has said it will release its first-quarter earnings report on Monday. A company spokesperson also noted that employees in the United States and Canada were instructed to work from home on Wednesday.
DBTech/BMT/OR
