Snap Inc (NYSE:SNAP) shares added more than 7% on Wednesday morning after the social media company unveiled plans to cut about one-sixth of its global workforce, a move aimed at boosting efficiency and accelerating its push toward profitability.
In a filing with the US Securities and Exchange Commission, the Snapchat app operator said it intends to reduce its full-time headcount by approximately 16%, or 1,000 employees, worldwide.
The company said the move is aimed at streamlining operations and reallocating resources toward higher-priority initiatives, as it seeks to improve efficiency and move closer to sustained profitability.
Snap estimates the restructuring will result in pre-tax charges between $95 million and $130 million. These costs are expected to largely consist of severance payments, contract termination costs, and other impairment charges. Of that total, between $75 million and $100 million is expected to be in future cash expenditures.
Most of the charges are anticipated to occur in the second quarter of 2026. However, the company noted that implementation may vary across regions due to local labor laws and consultation requirements, which could extend the process into the third quarter or later in some countries.
In a letter to staff included in the filing, Snap CEO Evan Spiegel described the cuts as a “crucible moment” for the company, underscoring the need to operate with greater speed, efficiency, and discipline while pivoting toward profitable growth.
Spiegel said Snap has spent recent months reviewing its operations and prioritizing investments most likely to create long-term value. As a result, the company expects to reduce its annualized cost base by more than $500 million by the second half of 2026, improving its pathway toward net income profitability.
He also highlighted the growing role of artificial intelligence in Snap’s operations, noting that internal teams are already using AI tools to reduce repetitive work, increase development speed, and improve performance across areas such as Snapchat+, advertising technology, and infrastructure efficiency.
Employees in North America were instructed to work from home on the day of the announcement, with impacted staff receiving direct notifications. US-based departing employees will receive four months of severance, healthcare coverage, equity vesting, and career transition support, while support in international markets will follow local standards and regulations.