Snap Inc (NYSE: SNAP) shares plummeted more than 30% in extended trading on Monday after the social media company lowered its outlook for the current fiscal quarter.
Snap blames macro environment
In a note to employees, CEO Evan Spiegel blamed the macro environment as he warned the company will report Q2 revenue and adjusted earnings below its own estimates.
The macro environment has deteriorated further and faster than we anticipated when we issued our quarterly guidance last month. As a result, while our revenue continues to grow YoY, it’s growing more slowly than we expected at this time.
Last month, Snap forecast its adjusted EBITDA to fall between $0 and $50 million this quarter on a 20% to 25% annualised increase in revenue. But now, the Santa Monica-headquartered company says both metrics will likely print below the expected range in the second quarter.
Snap to slow down hiring as well
Snap also confirmed that it will scale back on hiring for the balance of 2022 to minimise costs as it wrestles with the inflationary pressures, supply constraints, labour disruptions, geopolitical tensions, and Apple-related headwinds.
Shares of the NYSE-listed company are now down more than 65% for the year. Discussing the news on CNBC’s “Fast Money”, Tim Seymour – the Founder of Seymour Asset Management said:
There’s no question the new guide is coming from looking at ad revenue. Snap is still a company where the multiple makes no sense, the free cash flow dynamics make no sense for this market. So, I don’t want to own Snap here.
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