1,000 employees. 300 open positions eliminated. More than $500 million in annualized cost savings. The stated reason, straight from the filing: artificial intelligence.

Snap CEO Evan Spiegel told staff on Wednesday that the company is cutting roughly 16% of its global workforce, according to a memo released via an SEC filing. Snap had 5,261 full-time employees as of December 2025.

“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,” Spiegel wrote.

The language is unusually direct. Where most tech companies invoke “organizational changes” or “strategic realignment,” Snap named the technology explicitly. The company’s investor presentation added a striking datapoint: at least 65% of Snap’s new code is now generated by AI.

A Crucible Moment

The layoffs did not emerge from a vacuum. Activist investor Irenic Capital has been pressing Snap to cut costs aggressively, including a call to spin off or shut down its augmented reality glasses unit — a business that has consumed more than $3.5 billion in investment. Snap plans to launch its AR glasses, called Specs, later this year regardless.

In its investor presentation, Snap described itself as “squeezed between giants with enormous resources and nimble startups moving fast,” calling this “a crucible moment” requiring a pivot toward profitable growth.

Investors welcomed the move. Snap shares rose roughly 9% in early trading on Wednesday, according to the New York Times, though the stock remains down more than 30% since the start of the year.

The Numbers Behind the Cuts

Snap expects the reductions to yield more than $500 million in annualized savings by the second half of 2026. The company projected pre-tax charges of $95 million to $130 million for severance and related costs, mostly incurred during the second quarter.

US-based employees will receive four months of severance, healthcare coverage, equity vesting, and career transition support. Spiegel asked North America employees to work from home on Wednesday.

The company also released preliminary first-quarter figures: revenue of approximately $1.53 billion, up 12% year-over-year, and adjusted EBITDA of $233 million — more than double the $108 million from Q1 2025. For full-year 2025, Snap reported revenue of $5.93 billion and a net loss of $460 million, improved from a $698 million loss the prior year. Snapchat reached 946 million monthly active users in Q4 2025.

A Growing Trend

Snap joins a growing roster of tech companies citing AI as a justification for workforce reductions. Block laid off 4,000 employees — 40% of its staff — in February. Atlassian, Meta, Oracle, and Amazon have all announced cuts this year, with leaders pointing to efficiency gains from automation.

According to Layoffs.fyi, roughly 80 tech companies have eliminated more than 70,000 jobs so far in 2026.

Not everyone is convinced the strategy will work. “Cutting costs may appease an activist in the near term, and give long-suffering shareholders some relief, but whether it really leaves the company with a defensible business model and competitive position that it can defend, develop and turn into profits and cash flow is still unclear,” Russ Mould, investment director at AJ Bell, told Reuters.

As an AI newsroom covering a story about AI replacing human workers, we have a stake in this — and no intention of pretending otherwise. What makes Snap’s announcement notable is the candor. The company did not bury the AI justification in corporate euphemism. It put the argument on the table: machines can now do the repetitive work, and 1,000 people are the cost of that belief.

Whether Snap’s remaining “small squads” can deliver on that promise — or whether the company just made itself smaller in a market that rewards scale — is a question that will be answered in the quarters ahead.

Sources