Snap, creator of the messaging app Snapchat, said Monday it expects to miss its quarterly financial targets as it faces tough economic conditions.
Evan Spiegel, Snap’s chief executive, told employees in an email that the company is likely to miss its second-quarter revenue and adjusted profit targets. Snap will also slow its recruitment this year, although the company still expects to add about 500 employees, he said in an email, which was received by the New York Times.
“Like many companies, we continue to face rising inflation and interest rates, supply chain shortages and labor disruptions, changes in platform policy, the impact of the war in Ukraine and more,” he said. Spiegel wrote.
Snap’s share price fell nearly 30 percent in after-hours trading after the warning closed at 22.47. Snape declined to comment further.
Snape’s announcement comes amid a downturn for tech start-ups as venture capital funding declines and young companies cut costs and lay off employees. Some social media companies have also been hit by other factors, including changes to Apple’s privacy settings that have damaged their ability to target ads. Meta, Facebook’s parent company, has recently set up a temporary recruitment freeze for some roles.
However, tech giants, including Microsoft, Apple and Google, continue to spend heavily.
In April, Snape posted revenue of more than 1 billion in the first quarter, lower than Wall Street expectations. The company estimates that revenue for the second quarter will grow 20 to 25 percent from $ 982 million a year earlier.
“Since we issued the guidance on April 21, 2022, the macroeconomic environment has deteriorated faster and faster than expected,” Derek Andersen, Snape’s chief financial officer, wrote in a brief statement filed with the Securities and Exchange Commission.
Tom Forte, an analyst at DA Davidson, said digital advertising, which makes up most of Snape’s revenue, was one of the first cuts in a period of economic uncertainty.
“Given the growing list of challenges facing the economy, including inflation in food and fuel prices, we are not surprised that Snap’s 2Q22 sales are expected to be lower than its previous guidance,” he said. Fort said.