Snap Inc said the economy had worsened faster than expected in the last month and the social media company slashed their earnings forecast, leading to an after-hours sell-off.
At the end of April, “the macroeconomic environment has deteriorated further and faster than anticipated. As a result, we believe it is likely that we will report revenue and adjusted EBITDA below the low end of our Q2 2022 guidance range,” according to a US securities filing by the company.
Snap’s shares fell 31%, Alphabet dropped 3.6% and Amazon dropped 2.2%. The Nasdaq futures also fell, with traders blaming Snap for the losses.
Stocks ended higher on Monday and that market follows Wall Street’s longest streak of weekly declines since the dotcom bust more than 20 years ago. Evan Spiegel, chief executive at Snapchat, sent a memo to employees telling them the company will slow hiring this year and laid out a broad slate of problems.
He wrote, “Like many of the other companies, our company continues to see rising inflation, interest rates, supply chain shortages and labor disruptions.”
Snap is expected to witness 20% to 25% growth in revenue over the same time last year.
Many companies have announced they will rein in costs and job hiring. The news follows statements by companies including Uber and Facebook-owner Meta Platforms earlier this month.
In a memo, Spiegel said Snap would evaluate the rest of this year’s budget and leaders were asked to review spending to find additional cost savings.
He said, “500 people will be hired this year and there is a plan to hire more than 500 people next year as well.”