Evan Spiegel, CEO of Snap Inc., speaks onstage during the Snap Partner Summit 2023 at Barker Hangar on April 19, 2023 in Santa Monica, California.
Joe Scarnici | Getty Images Entertainment | Getty Images
Shares of Snap climbed 13% Tuesday following the release of a letter from activist shareholder Irenic Capital Management to CEO Evan Spiegel. The letter outlines a series of strategic changes Irenic believes could unlock significant shareholder value, potentially boosting Snap’s stock by nearly 600%.
“Snap should not continue doing what it has been doing. It’s not working,” Irenic stated in its correspondence, which was published alongside a detailed presentation of recommendations. This direct critique signals a growing dissatisfaction among some investors with Snap’s current trajectory.
The recommendations, presented under the provocative title “6 Steps to 7X,” propose a radical overhaul aimed at elevating Snap’s stock price from its current level of $3.93 to an ambitious target exceeding $26 per share.
A key proposal from Irenic involves the potential shutdown or divestiture of Specs, Snap’s augmented reality (AR) glasses unit. Launched as a wholly owned subsidiary in January, the Specs division represents a significant investment in future hardware technology. Irenic’s argument for its divestiture likely stems from concerns about its current contribution to profitability and its perceived drain on resources, especially in the context of the company’s overall financial performance.
Furthermore, Irenic advocates for a substantial workforce reduction, suggesting that Snap leverage artificial intelligence (AI) more aggressively to streamline operations and cut approximately 1,000 employees, equating to 21% of its current workforce. This recommendation draws parallels with recent restructuring efforts observed at other tech giants, including Uber, Meta, and Block, where AI integration and workforce rationalization have been employed to enhance efficiency and reduce costs.
“AI can and should replace many existing roles,” Irenic asserted in its “rationalize costs” section, underscoring the transformative potential of AI in optimizing human capital and operational expenditures.
Irenic Capital, which manages approximately $2.5 billion in assets, disclosed in its letter that it holds about 2.5% of Snap’s Class A shares, positioning it as a significant stakeholder with a vested interest in the company’s future performance.
“Snap welcomes input from all shareholders and regularly engages with investors on strategy, capital allocation, and governance,” stated Snap chairman Michael Lynton in response. “We’ve taken steps to improve performance, strengthen free cash flow, and offset dilution, and will continue to evaluate actions that drive long-term value for all stockholders.” This statement suggests an openness to dialogue but also highlights Snap’s own ongoing efforts to address performance issues.
The company’s stock performance since its 2017 initial public offering has been challenging, with shares down approximately 83% from their peak. This historical context likely fuels Irenic’s urgent call for change.
In an effort to diversify its revenue streams, Snap has recently introduced a creator subscription feature. This initiative, launched last month, aims to tap into the creator economy and provide an additional income source beyond advertising. Additionally, during its Q4 fiscal 2025 earnings call, Snap announced a $500 million stock repurchase program, signaling a commitment to returning value to shareholders through buybacks.
Snap stock since its IPO.
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