Snap lost nearly a third of its value on Monday after the social media team said in an unscheduled earnings warning that it would be hit by worsening macroeconomic conditions.
Snapchat’s parent company said in a regulatory filing that since issuing earnings guidance on April 22, “the macroeconomic environment has deteriorated faster and faster than anticipated.”
It added that as a result, it expected revenue and adjusted earnings before interest, depreciation and amortization to come in this quarter “below the low end” of its guidance range.
In a memo to employees, chief executive Evan Spiegel said that while business fundamentals remain “strong,” the company faces “inflation and rising interest rates, chain shorting labor supply and disruption, fundamental policy changes, the impact of war in Ukraine, and more.”
He said the company would slow hiring and investment “at a slower pace than we had planned for the operating environment”.
Spiegel said Snap will “assess the remainder of our 2022 budget,” adding that “leaders have been asked to review spending to find additional cost savings.” fig”.
The US tech sector has grown tremendously over the past two years as users during the coronavirus pandemic lockdowns spend more and more time and money online. The assets are now Substantial and fast reverseHowever, concerns about rising interest rates, slowing economic growth and supply chain disruptions have triggered a deep and wide sell-off in stocks, prompting some of the biggest tech conglomerates to curtail hiring. , cut costs and readjust expectations.
Shares of Snap fell 30% in after-hours trading to less than $16. Other tech stocks that get most of their digital ad revenue were also affected, with Google’s Meta and Alphabet falling 8% and 5%, respectively. Meta recently reduced its hiring target for 2022, while Uber is also keeping its costs under control.
Los Angeles-based Snap previously said it expected adjusted ebitda to break even and $50 million in the second quarter.
It also said it expects revenue growth of 20-25% year-over-year in the second quarter – compared with 116% revenue growth in the second quarter of 2021 during the time of the pandemic stalling.
Beyond the macroeconomic backdrop, Snap has faced other headwinds. In October last year, it lost a quarter of its value after publishing a dismal outlook for the fourth quarter, blaming disruptions to its ad business due to privacy changes on Apple’s iPhones. . The rules require apps on Apple’s App Store to be explicitly authorized by users in order to track them for advertising purposes.
“Our community continues to grow and we continue to see strong engagement on Snapchat and continue to see significant opportunities to grow our average revenue per user over the long term,” Snape said. said on Monday.