Snap plummets as much as 28% as CEO warns the economic downturn will lead to slower hiring and lower revenue growth

On Tuesday, the company's stock fell by as much as 28% after the CEO warned that the company is likely to miss its revenue targets.

In a memo obtained by Insider, Spiegel told employees that the challenging macroeconomic environment will cause both revenue and earnings to fall. headcount is expected to grow 10% this year, with the pace of hiring slowing.

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.

According to the note, the company is expected to hire 500 new employees this year, a sharp decline from the 2,000 new hires they announced in the previous year.

After finishing Monday's regular session at $22.47, which marked a decline of 4%, the shares were last down 28.4% at $16.10 in pre-market trading.

The macroeconomic environment has deteriorated further and faster than anticipated, and parts of the letter were included in a Securities and Exchange Commission 8-K filing.

Tech stocks have struggled this year, with rising interest rates and an economic downturn driving the sell-off. Meta Platforms and Uber recently announced they would reduce their hiring targets.

Spiegel told employees that they would be taking steps to reprioritize their investments.

Other social media companies were dragged down by the fall of Snap.

Russ Mould, investment director at AJ Bell, said that it was understandable why investors were fearful.

The futures on the tech-laden Nasdaq 100 were down almost 2%, indicating that Monday's gains could potentially be reversed at the opening bell.

The investors are getting set for another twist on the roller coaster with Monday's gains set to be largely erased after a very downbeat snapshot was released.