Shares of Snap (SNAP) are up 10% after the social media company announced plans to cut 16% of its global workforce, citing “AI-driven efficiencies.”
CEO Evan Spiegel said in a note to staff that the workforce reduction would impact 1,000 people. He added that at least 300 open positions would no longer be filled.
Snap, the parent company of messaging app Snapchat, plans to allocate more resources to its highest priority initiatives in an effort to boost profitability.
“We believe that rapid advancements in artificial intelligence enable our teams to reduce repetitive work, increase velocity, and better support our community,” said Spiegel.
The layoffs are expected to cost Snap $95 million U.S. to $130 million U.S. in this year’s second quarter, mostly due to severance packages.
Spiegel noted that the layoffs would reduce the company’s annualized cost base by more than $500 million U.S. by the second half of this year.
Snap is the latest U.S. technology company to announce major layoffs due to the impacts of artificial intelligence.
In February, fintech company Block (XYZ) announced it was laying off 4,000 employees or nearly 40% of its workforce, citing A.I. impacts.
SNAP stock has declined 90% over the last five years to trade a $5.60 U.S. per share.
Tech Insider
