"When an activist investor with a 2.5% stake tells you to fire people, you listen. That's the takeaway from Snap CEO Evan Spiegel's announcement Wednesday that the company is cutting roughly 1,000 jobs - about 16% of its workforce - just weeks after Irenic Capital Management publicly called out the company for overhiring."
"Irenic didn't mince words in its March letter, pointing to Meta and Block as examples of companies that got leaner through layoffs. The investor argued Snap's market cap should be closer to $35 billion instead of its current enterprise value of around $7.9 billion."
"This is the third time Snap has swung the ax since 2022. Still, the company projects first-quarter revenue climbed 12% to $1.53 billion, with adjusted EBITDA around $233 million."
Snap is reducing its workforce by approximately 1,000 jobs, which is about 16% of its total employees, following pressure from Irenic Capital Management. The layoffs aim to cut annualized costs by over $500 million. Irenic Capital criticized Snap for overhiring and suggested that the company's market cap should be significantly higher than its current valuation. Despite the layoffs, Snap anticipates a 12% revenue increase in the first quarter, indicating a potential path to profitability through cost-cutting measures.
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