In this screenshot, Evan Spiegel, CEO of Snap Inc, is taking the stage at the Virtual Snap Partner Summit 2021 on May 20, 2021 in Los Angeles.
Snap Partner Summit 2021 – Snap Inc | Getty Images
Snap shares plunged more than 20% on Monday after CEO Evan Spiegel warned employees that the company would miss its target for revenue and consistent earnings in the current quarter.
The social media company will slow down recruitment by the end of the year as it looks to manage costs, Spiegel writes. Parts of the letter were submitted to the Securities and Exchange Commission.
“Today we submitted an 8, sharing that the macro environment has deteriorated more and faster than we expected when we issued our quarterly guidelines last month,” Spiegel wrote in a note. “As a result, although our income continues to grow year by year, it is growing faster than we expected at this time.”
In April, Snap reported first-quarter earnings that missed Wall Street expectations for sales and profits. At the time, the company said it would increase revenue by 20% to 25% a year. It predicts a consistent income between, 0 to $ 50 million before interest, taxes, depreciation and repayment.
“We believe we will now probably report revenue and consistent EBITDA below the lower end of the guideline range we have provided for this quarter,” Spiegel wrote in Monday’s update.
Spiegel said Snap will continue to recruit new employees, but will slow down their recruitment for the rest of the year. He still expects Snap to hire 500 new employees before the end of the year, according to the note. The company has hired about 2,000 employees in the last 12 months.
The makers of the Snapchat app are facing platform policy changes, such as rising inflation and interest rates, supply chain shortages, labor constraints and Apple’s iPhone privacy features, according to Spiegel. The war in Ukraine also has negative effects.
“Our most significant gains in the coming months will come from the improved productivity of our existing team members,” Spiegel wrote.
As of Monday’s close, Snap shares are down more than 50% for the year, while the S&P 500 is down 17% on that stretch.