Evan speigel, CEO of snapchat, the parent company of snapchat, warned in a report to employees on Monday that the company would not be able to achieve its revenue and adjusted revenue targets in the second quarter. The company's share price plummeted nearly 30% after hours. Speigel said the social media company will also slow recruitment by the end of this year because it wants to manage expenses. Part of this letter has been filed with the securities and Exchange Commission (SEC).
Spiegel wrote: "today we submitted an 8-K report showing that the macro environment is deteriorating much faster than we expected when we released the quarterly guidelines last month. Therefore, although our revenue continues to grow year-on-year, the growth rate is slower than we currently expect."
The first quarter results released by snap in April were lower than Wall Street's expectations. The company's EBITDA is expected to increase between $50 million and $0.2 million in the second quarter.
"We believe that the revenue and adjusted EBITDA we will report will be lower than the low end of the guidance range," Spiegel wrote in an updated report on Monday
Spiegel said snap will continue to recruit new employees, but will slow down the pace of recruitment for the rest of the year. He still expects snap to hire 500 new employees by the end of this year. The company has employed about 2000 employees in the past 12 months.
Spiegel said the company was facing inflation and rising interest rates, supply chain shortages, labor disruptions and AppleiPhone Changes in platform policies such as privacy functions. The conflict between Russia and Ukraine also has a negative impact.
As of Monday's close, snap's share price has fallen more than 50% so far this year, and the S & P 500 index has fallen 17% over the same period.
