Shares of social media giant Snap (SNAP) plunged 30% in premarket trading after the company
warned that it will miss its targets for revenue and adjusted earnings in the current quarter.
The social media company also said it will reduce its hiring plans this year as it looks to manage
expenses. The earnings warning was filed with the U.S. Securities and Exchange Commission
(SEC) and made public.
“Today we filed an 8-K, sharing that the macro environment has deteriorated further and faster
than we anticipated when we issued our quarterly guidance last month,” SNAP chief executive
officer (CEO) Evan Spiegel wrote in a note to employees. “As a result, while our revenue
continues to grow year-over-year, it is growing more slowly than we expected at this time.”
In April, Snap reported first-quarter earnings that missed Wall Street expectations for sales and
profit. At that time, the company said it expected between 20% and 25% year-over-year growth
in revenue. It forecast adjusted earnings of between $0 and $50 million.
“We believe it is now likely that we will report revenue and adjusted EBITDA below the low end
of the guidance range we provided for this quarter,” wrote Spiegel.
The latest news from Snap, which runs the popular Snapchat social media site, hit other social
media stocks hard, sending many of Snap’s peers spiraling lower. Shares of Facebook parent
company Meta Platforms (FB) fell 7% in after-hours trading. Twitter’s (TWTR) stock fell nearly
5%, while Pinterest’s (PINS) share price declined 12%.
Spiegel said Snap will continue to recruit new employees but will slow its pace of hiring for the
rest of the year. He still expects Snap to hire 500 new employees before the end of the year.
The company has hired about 2,000 employees over the last 12 months.
As of yesterday’s close of trading (May 23), Snap stock was down more than 50% on the year
at $22.47 U.S. a share.
