Snap to cut 1,000 jobs, shares spark

(Sharecast News) - Snap said on Wednesday that it was going to cut around 1,000 staff members, including 16% of its full-time employees, sending shares in the Snapchat parent surging.

The company, which will be closing more than 300 open roles, said it had been "an incredibly difficult decision".

Chief executive Evan Spiegel said in a note to team members on Wednesday: "Over the past several months, we have carefully reviewed the work required to best serve our community and partners, and made tough choices to prioritise the investments we believe are most likely to create long-term value. As a result of these changes, we expect to reduce our annualized cost base by more than $500 million by the second half of 2026, helping to establish a clearer path to net-income profitability.

"While these changes are necessary to realize Snap's long-term potential, 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.

"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 announcement came just two weeks after activist investor Irenic Capital Management - which owns a 2.5% stake in Snap - outlined in a letter to the company a series of changes it could make to improve its financial performance and realise a share price of $26.37.

The recommendations from Irenic included shutting down augmented reality glasses business Specs, rationalising the cost structure, focusing on AI to improve ad monetisation and monetising the latent AI opportunity, among other things.

Under the recommendation to rationalise costs, Irenic said Snap "can and should leverage AI to drive efficiency in the organisation and remove excessive layers."

It recommended that Snap cut 21% of its workforce.

At 1255 BST, Snap shares were up 8.7% at $5.60.