Snap plunges more than 20% after CEO warns company will miss revenue and earnings estimates, slow hiring

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  • Snap will miss its own targets for revenue and adjusted earnings in the current quarter, CEO Evan Spiegel warned in a note to employees on Monday.
  • The social media company will also slow hiring until the end of the year as it seeks to manage expenses.

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Snap shares fell more than 20% on Monday after CEO Evan Spiegel warned in a note to employees that the company would miss its own targets for revenue and adjusted earnings in the current quarter.

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The social media company will also slow hiring through the end of the year as it manages expenses, Spiegel wrote. Part of the letter was filed with the Securities and Exchange Commission.

“Today we filed an 8-K, sharing that the macro environment has deteriorated more rapidly than we anticipated in our quarterly guidance release last month,” Spiegel wrote in the note. “As a result, while our revenue continues to grow year over year, it is growing more slowly than we expected at the moment.”

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In April, Snap reported first-quarter earnings that missed Wall Street’s sales and profit expectations. At the time, the company said it expected revenue to increase 20% to 25% year-over-year. It estimates adjusted earnings before interest, taxes, depreciation and amortization 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,” Spiegel wrote in Monday’s update.

Spiegel said that Snap will continue to recruit new employees, but will slow the pace of recruitment for the rest of the year. According to the note, he still expects Snap to hire 500 new employees before the end of the year. The company has hired around 2,000 employees in the last 12 months.

Platforms such as rising inflation and interest rates, supply chain constraints, labor disruptions and Apple’s iPhone privacy feature are facing policy changes, according to Snapchat app maker Spiegel. The war in Ukraine has also had negative effects.

“Our most meaningful gains in the coming months will come as a result of improved productivity from our existing team members,” Spiegel wrote.

As of Monday’s close, Snap shares were down more than 50% for the year, compared to a 17% drop for the S&P 500. After hours, the stock fell 24% to $17.

Credit: www.cnbc.com /

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