Snap shares plunge as it cuts second quarter forecast

The social media company slashed its quarterly forecast, triggering an after-hours sell-off, as Snap said the economy had worsened faster than expected in the last month.

Since April, the macroeconomic environment has deteriorated faster and faster than anticipated. Revenue and adjusted EBITDA will be reported in a US securities filing, and the company believes that it is likely that we will report revenue and adjusted EBITDA below the low end of our Q 2 2022 guidance range.

Shares of Snap fell 31 per cent, Alphabet dropped 3.6 per cent and Amazon dropped 2.2 per cent. Nasdaq futures fell, with traders blaming Snap.

The US stocks ended higher on Monday, boosted by gains from banks and tech, but the rise follows Wall Street's longest week of declines since the dotcom bust more than 20 years ago, and many investors remain on edge.

In a memo seen by Reuters, Snap Chief Executive Evan Spiegel told employees that the company will slow hiring for this year and laid out a wide slate of problems.

Like many companies, we continue to be affected by rising inflation and interest rates, supply chain shortages and labor disruptions, platform policy changes, the impact of the war in Ukraine, and more, he wrote.

In the month of September, Snap forecast second quarter revenue growth of 20 per cent to 25 per cent over the previous year.

The news comes after companies like Uber Technologies Inc and Facebook-owned Meta Platforms Inc said earlier this month they would rein in costs and hire.

In the memo, Spiegel said Snap would look at the rest of the budget and leaders have been asked to review spending to find additional cost savings. He said that the company still expects to hire more than 500 people by the end of the year, though some planned hiring will be pushed into next year.