In this screenshot, the CEO of Snap Inc. Evan Spiegel takes the stage at the Virtual Snap Partner Summit 2021 on May 20, 2021 in Los Angeles.
Snap Partner Summit 2021 – Snap Inc | Getty Images
Shares of Snap fell more than 25% on Monday after CEO Evan Spiegel warned in a note to employees that the company would not meet its own revenue and adjusted earnings targets this quarter.
The company on social media will also slow down hiring by the end of the year as it seeks to manage costs, writes Spiegel. Part of the letter was submitted to the Securities and Exchange Commission.
“Today, we filed an 8-K statement saying the macro environment has deteriorated further and faster than we expected when we released quarterly instructions last month,” Spiegel wrote in a note. “As a result, although our revenues continue to grow from year to year, they are growing slower than we expected at this time.”
In April, Snap reported first-quarter earnings that did not live up to Wall Street’s expectations regarding sales and profits. At the time, the company said it expects revenue growth of 20% to 25% over the same period last year. It forecasts adjusted earnings before interest, taxes, depreciation and amortization of $ 0 million to $ 50 million.
“We believe that now, most likely, we will report earnings and adjusted EBITDA below the lower range of benchmarks we presented for this quarter,” Spiegel wrote on Monday.
Matching Snap industry came across this news. Shares of the parent company Facebook Meta fell 7% in trading during non-business hours. Twitter fell nearly 4% and Pinterest fell 12%.
Spiegel said Snap will continue to hire new employees, but will slow the pace of hiring by the end of the year. He still expects Snap to hire 500 new employees by the end of the year, the note said. Over the past 12 months, the company has hired about 2,000 employees.
The maker of the Snapchat app is facing rising inflation and interest rates, supply chain shortages, disruptions and changes in platform policies such as Apple’s iPhone privacy feature, Spiegel reports. There is also a negative impact of the war in Ukraine.
“Our most significant achievements in the coming months will be due to the increased performance of our existing team members,” Spiegel writes.
As of Monday’s close, Snap shares were down more than 50% year-over-year, compared to a 17% drop for the S&P 500. A few hours later, shares fell 28% to $ 16.15. If on Tuesday it falls by more than 26.6%, it will be the worst day for stocks since the company went public in 2017.
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