The owner of the popular messaging app Snapchat, Snap Inc., has undergone major layoffs, laying off about 1,000 employees, which accounts for 16% of the total workforce. CEO Evan Spiegel openly stated that the main driving force behind these changes was the rapid development of artificial intelligence.
Major Layoffs at Snap
Snap Inc., the owner of the popular messaging app Snapchat, has undergone significant personnel changes. About 1,000 employees, which accounts for 16% of the total workforce, have been laid off, and over 300 open positions have been frozen. CEO Evan Spiegel candidly stated that the primary reason for these layoffs was the rapid progress in artificial intelligence.
These measures will allow Snap to save over $500 million annually by the second half of 2026. However, the company will incur one-time compensation costs ranging from $95 to $130 million.
AI as a Driver of Efficiency
"We have already seen small teams making significant progress in several important areas with the help of AI tools," emphasized Spiegel. He immediately pointed to specific areas where AI demonstrates its power: Snapchat+ subscription, advertising platform, and the infrastructure of the lightweight version Snap Lite.
In his opinion, the development of artificial intelligence "allows teams to reduce routine work, accelerate processes, and better serve audiences, partners, and advertisers." This opens up new opportunities for optimizing workflows.
Market Reaction and Financial Outlook
Financial markets reacted positively to the news: SNAP shares surged by more than 8% at the close of trading on April 15. Analysts from BMO Capital and Citi quickly raised their target prices for the company's stock.
Investor enthusiasm is quite understandable, as Snap has never achieved an annual net profit in its entire history. This decision is perceived as a step towards long-awaited financial stability.
Canceled Deal and Optimistic Forecast
Meanwhile, a previously signed deal with Perplexity for $400 million (in cash and stock) was canceled. Under the terms of the agreement, Perplexity was to integrate its search AI engine directly into Snapchat.
This deal promised Snap significant revenue, about 7% of its income for 2025, and would have strengthened the company's reputation as an "AI-first" social network.
Against the backdrop of mass layoffs, Snap also adjusted its financial forecast for the first quarter in a more optimistic light. The expected revenue is now $1.529 billion, which is 12% higher compared to last year. The projected adjusted EBITDA reaches about $233 million.
Investments in AR Glasses and the Future
Earlier this year, Snap underwent structural changes, splitting into two parts. The core business related to the social network was separated from the subsidiary Specs Inc., which is working on the AR glasses project.
Snap has already invested over $3.5 billion in the development of these innovative glasses and spends about $500 million annually. Rumor has it that part of the savings from the layoffs will be directed towards the development of Specs.
Snap Among Technology Leaders
With its actions, Snap has joined a number of tech giants such as Meta, Oracle, Amazon, Uber, Block, Salesforce, and IBM. These companies have already conducted layoffs over the past year, citing increased efficiency due to artificial intelligence.
However, Snap stands out for its exceptional straightforwardness and specificity in its statements. In official SEC documents, the company does not just refer to general "efficiency from AI," but details the specific areas where small teams armed with AI have replaced larger ones.
The next important date for investors will be May 6, when the full report for the first quarter will be published. It will be at that time that it will become clear how realistic the promised financial savings are.
Employees laid off in the U.S. will receive adequate support: four months of compensation, health insurance, and assistance in finding new jobs.
