(Bloomberg) – Snap Inc. cut its revenue and profit forecasts to the bottom of its previous guidelines, sending shares down as much as 31% and pushing other social media stocks down.
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The company will slow down hiring by filling 500 roles before the end of the year, CEO Evan Spiegel said in a note addressed to employees. “Like many companies, we are constantly experiencing rising inflation and interest rates, supply chain deficits and labor disruptions, changes in platform policy, the effects of the Ukraine war and much more,” he wrote in a memo obtained by Bloomberg.
Read more: Evan Spiegel’s complete memo to staff
Snap benefited from increased use of its Snapchat app during the epidemic, when people were looking for entertainment and connectivity from their homes. Now, with people returning to office and school, the company is coming back from the same combination of economic pressures that its competitors are also facing.
“The overall economic environment has deteriorated more and faster than expected,” Snap said in a filing. “As a result, we believe we will report revenue and consistent Ebitda below the lower end of our Q2 2022 guideline range.”
The company’s second-quarter forecast, for 20% to 25% year-over-year revenue growth, was already below analysts’ estimates. The warning immediately hit other advertising-dependent companies, including Meta Platform, Twitter Inc., Alphabet Inc. and Pinterest Inc.
Dan Suzuki, deputy chief investment officer at Richard Bernstein Advisors, told Bloomberg Television on Monday that companies need to “bring back the expectations of these unattainable, unrealistic investors.” “As these companies mature, the underlying growth is slowing down and it is becoming more competitive.” Suzuki’s firm, which has about $ 15 billion in assets under management, does not hold direct snap stock.
Platforms are all competing for ad dollars at a challenging time. Advertisers are facing a shaky economy as well as recent privacy changes, such as Apple Inc.’s tracking restrictions, which have slowed businesses down most of the time of the epidemic.
Due to the macroeconomic environment, Facebook has reduced parent meta costs in the past month. Twitter recently announced a reduction in recruitment fridges and other costs to save cash. “The global macroeconomic environment has become less favorable, the war in Ukraine has affected our outcome, and it could continue,” Twitter CEO Parag Agarwal said in an email to employees. “Many other companies have had similar effects.”
Spiegel told staff that company leaders have been asked to review costs to see if there are any other areas to cut. “Our most significant gains in the coming months will come from improved productivity from our existing team members,” he wrote.
(Update with staff memo in paragraph 1)
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