Social media firm Snap lost a third of its market value in Monday after-hours trading and triggered a tech sell-off after it warned it would be affected by deteriorating macroeconomic conditions.
The Snapchat operator said in an unscheduled regulatory filing that since its last guidance on 22 April “the macroeconomic environment has deteriorated further and faster than anticipated”.
This meant Snap’s earnings for this quarter would be “below the low end” of its guidance range, the firm said.
“Our community continues to grow, and we continue to see strong engagement across Snapchat, and continue to see significant opportunities to grow our average revenue per user over the long term,” Snap said.
Following the warning Snap’s shares fell 30 percent in after-hours trading to below $16 (£13).
The shares of other tech companies that depend on advertising for their revenues also fell, with Facebook parent Meta dropping 8 percent and Google parent Alphabet declining 5 percent.
In a separate memo to staff Snap chief executive Evan Spiegel said the business’ fundamentals remained “strong” but that the firm, like others, was affected by “rising inflation and interest rates, supply chain shortages and labour disruptions, platform policy changes, the impact of the war in Ukraine and more”.
These have affected social media companies directly, as well as indirectly via their advertisers.
Spiegel said Snap would slow the pace of hiring and invest “at a slower pace than we had planned given the operating environment”.
He said Snap would “evaluate the remainder of our 2022 budgets” and added that “leaders have been asked to review spending to find additional cost savings”.
Los Angeles-based Snap previously said it expected adjusted earnings to be between break-even and $50 million in the second quarter.
It said at the time it anticipated 20 to 25 percent revenue growth year-over-year for the quarter – compared with 116 percent year-on-year sales growth in the second quarter of 2021.
In October of last year Snap’s shares lost a quarter of their value after the company warned on earnings for the fourth quarter, saying Apple’s iPhone privacy changes had disrupted its advertising business.
Meta shares were hit in February after a similar warning.
US FCC regulator gives its official approval for SpaceX to use its Starlink satellite internet…
Privacy quest. Google is a repeat offender, says BEUC, as ten European consumer groups file…