Snap is cutting 16% of its workforce to sharpen focus on AR glasses

Snap $SNAP said it will cut about 1,000 employees — roughly 16% of its full-time workforce — as the Snapchat parent looks to lower costs and use AI to operate with smaller teams. The company also said it is closing more than 300 open roles.

CEO Evan Spiegel said in a letter to employees that the cuts are expected to reduce annualized expenses by more than $500 million by the second half of this year. Snap had about 5,261 full-time employees as of December. The company expects to incur $95 million to $130 million in charges, mostly for severance, with the majority of those costs landing in the second quarter.

According to the company, improvements in AI technology have made it possible to cut redundant tasks, tighten workflows, and maintain output with fewer staff. Reductions to stock-based compensation and overall operating expenses are also on the table as Snap pursues a wider effort to bring down costs.

The restructuring accelerates Snap's push to separate its legacy Snapchat business from Specs, a wholly owned subsidiary focused on augmented reality glasses. According to Outlook Business, people familiar with the matter told the outlet that the reductions are designed to draw a sharper line between the Snapchat side of the business and the Specs unit. Open positions are being added within Specs at the same time, among them roles tied to Lens Studio, the platform developers use to create AR experiences.

Snap set up the Specs subsidiary in January 2026 to focus more on AR hardware and attract outside investment, possibly from minority investors. The company also plans to launch its sixth generation of AR glasses for consumers this year.

The layoffs came weeks after activist investor Irenic Capital Management, which holds an economic interest of about 2.5% in Snap, pushed the company to optimize its portfolio and cut costs. The activist firm called on Snap to either divest or wind down Specs, pointing to what it characterized as a cumulative investment of over $3.5 billion in the unit alongside annual cash consumption approaching $500 million.

Separately, a planned integration deal with AI company Perplexity collapsed before the cuts were announced, according to Outlook Business. Under the proposed deal, Perplexity would have contributed $400 million in a mix of cash and equity in exchange for placing its AI answer engine within Snapchat, but disputes over the conditions of the arrangement ultimately caused it to fall apart.

The cuts are part of a broader wave of tech-sector layoffs that companies have increasingly attributed to AI-driven efficiency gains — a trend some management experts have labeled "AI-washing," in which firms use AI as cover for cuts driven by more conventional factors such as over-hiring, margin pressure, or strategic missteps.

Snap stock rose more than 10% in premarket trading following the announcement. The stock had fallen about 31% so far this year before the move.