The maker of the messaging app said on Monday that it expected to miss its quarterly financial goals as it dealt with toughening economic conditions.
In an email to employees, Evan Spiegel said that the company was likely to miss its targets for revenue and adjusted profit in the second quarter. In an email obtained by The New York Times, he said that the company would slow its hiring this year, though it still expected to add 500 employees.
Like many companies, we face rising inflation and interest rates, supply chain shortages and labor disruptions, platform policy changes, the impact of the war in Ukraine, and more.
After closing at $22.47, the stock price plummeted nearly 30 percent in after-hours trading. The company did not comment further.
As venture capital funding has fallen and young companies have been cutting costs and laying off employees, there has been a slowdown in tech start-ups. Changes to Apple's privacy settings have hurt the ability of social media companies to do targeted advertising. Meta, the parent company of Facebook, instituted a temporary hiring freeze.
Tech giants like Microsoft, Apple and Google are still spending a lot.
In the first quarter of the year, the company reported more than $1 billion in revenue, but it fell short of Wall Street's expectations. Revenue for the second quarter is projected to increase by 20 to 25 percent.
The macroeconomic environment has deteriorated faster than anticipated since we issued guidance on April 21, 2022, according to a brief statement filed with the Securities and Exchange Commission.
Digital advertising, which makes up much of the revenue of the company, was often the first to be cut in times of economic uncertainty.
The growing list of challenges to the economy, including inflation in food and fuel prices, we are not surprised that Snap's 2Q22 sales are expected to fall short of its prior guidance.