US Stock Market Move | Snap Inc (SNAP.US) rose more than 6% and launched a 16% layoff plan in an effort to increase profits.

On Wednesday, Snap Inc (SNAP.US) rose more than 6%, reaching $5.95. On the news front, Snap announced on Wednesday that they will be laying off about 1,000 full-time employees, which accounts for 16% of its global workforce, and closing over 300 open positions. This is the latest major restructuring the company has taken to reduce costs and shift towards profit growth. The company stated that they expect to incur related expenses of $95 to $130 million in the second quarter, mainly related to severance packages, contract termination costs, and asset impairment charges. CEO Evan Spiegel stated in a memo to employees that this move aims to increase operational efficiency, and highlighted how advancements in artificial intelligence technology are prompting the team to reduce repetitive tasks. Last month, activist investment firm Irenic Capital Management acquired about 2.5% of Snap's stock and urged the company's management to take a series of measures to enhance the company's valuation. These suggestions include reducing the size of the workforce, as well as closing or possibly spinning off its Specs business unit. In a letter to the company, Irenic mentioned that Snapchat's operating cost structure needs to be optimized and pointed out the issue of over-hiring in the past. The investment firm also cited recent layoff cases at other companies, such as Meta and Block, as references for improving efficiency.