Snap stock plunges after CEO warns of slowed revenue growth
Shares for Snap were down more than 25% in after-hours trading Monday after the company warned investors of slowed growth in the months ahead.
Why it matters: The news comes as the entire tech sector, but particularly social media companies, struggle to maintain the unprecedented growth levels they saw during the pandemic.
Details: In a regulatory filing submitted Monday, Snap said the company expects to miss its own revenue and profit targets for the current quarter.
- In the filing, the company said the "macroeconomic environment has deteriorated further and faster than anticipated" since it last reported that guidance on April 21, 2022.
- Snap CEO Evan Spiegel is currently speaking at a JP Morgan global conference about the company's growth.
As a result of the slowed growth, the company plans to slow hiring for the remainder of the year, according to a note sent to employees by Spiegel and obtained by Axios. The note was first reported by CNBC.
- "We will continue to hire new team members, including recruiting for open roles," the memo said. "We will slow our pace of hiring for unopened roles for the remainder of the year, as well as push some planned hiring into next year."
Yes, but: Spiegel notes that the company expects to hire more than 500 new team members between now and the end of the year, "representing nearly 10% company-wide headcount growth over the next seven months," he wrote.
- Snap will also continue to backfill existing positions that become available as a result of attrition "if those roles remain a high priority for our teams," Spiegel added.
- Other tech firms have also slowed or frozen hiring.
Flashback: Snap predicted last quarter that its second quarter revenues would grow between 20% and 25%, which was below Wall Street estimates.
- Those projections, combined with a Q1 revenue and earnings miss, drove Snap's stock down slightly, despite the fact that the tech giant reported strong user growth. (Snapchat now has 100 million more daily active users than Twitter.)
- Snap's stock is down more than 50% year-to-date and is down roughly 70% from its all-time trading high of roughly $75 last fall.
The big picture: Shares for tech companies are down across the board as the market begins to course correct from inflated pandemic valuations.
- Tech giants have continued to blame macro-economic factors, including advertising slowdowns in markets impacted by Russia's invasion of Ukraine, for slowed advertising growth.
- Snap and other tech firms have also been impacted to varying degrees by changes to Apple's privacy settings.