Snap Says It Will Miss Earnings Targets, Slow Down Hiring
Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.
Snap warned on Monday that it will likely report lower-than-expected revenues and profits this quarter—a revelation that sent the social media firm’s stock price plunging by 30%.
“The macroeconomic environment has deteriorated further and faster than anticipated,” Snap disclosed in a filing with the Securities and Exchange Commission. “As a result, we believe it is likely that we will report revenue and adjusted EBITDA below the low end of our [second quarter] 2022 guidance range.”
The Santa Monica-based company was already bracing for another challenging quarter due to economic headwinds like inflation and Russia’s invasion of Ukraine, which it said have harmed the digital advertising market. Snap, which generates virtually all of its revenue from ads, is also still grappling with Apple’s decision to restrict how users are tracked on mobile devices.
As a result of the gloomy outlook, Snap is set to slow down on hiring, according to Business Insider. The company now plans to hire another 500 new employees through the end of this year, compared to the 900 employees who have already accepted offers this year and the 2,000 people it added over the last 12 months, according to a staff memo from Snap CEO Evan Spiegel.
“Our most meaningful gains over the coming months will come as a result of improved productivity from our existing team members,” Spiegel wrote in his note to staff.
Snap’s shares subsequently fell more than 30% in after-hours trading, to $15.71 as of 4:45 p.m. Pacific Time. The company’s stock closed Monday’s trading at $22.47—down 52% since the start of this year and 73% off its 52-week high in September. (Disclosure: Snap is an investor in dot.LA.)
Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.
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