Like the ephemeral nature of its social media app Snapchat, Snap Inc. (NYSE: SNAP) saw its Q2 2022 guidance quickly disappear within a month after announcing it. The company is expecting to miss the lower end of the bracket for its revenue and adjusted EBITDA outlook.
In an 8K filing on Monday, the company blames the guidance cut on the “challenging macroeconomic environment.”
“Since we issued guidance on April 21, 2022, the macroeconomic environment has deteriorated further and faster than anticipated. As a result, we believe it is likely that we will report revenue and adjusted EBITDA below the low end of our Q2 2022 guidance range,” said the company in the filing.
However, the company also said it remains “excited about the long-term opportunity to grow [its] business.”
Nevertheless, the firm’s shares fell 34.36% after hours following the announcement, trading at its lowest year-to-date price.
The “deteriorating macroeconomic environment” warning also sent major digital advertising names plummeting, led by a 7.82% dip for Meta Platforms (Nasdaq: FB), a 4.37% dip for Alphabet (Nasdaq: GOOGL), a 3.59% dip for Twitter (NYSE: TWTR), and a 16.33% dip for Pinterest (NYSE: PINS).
CEO Evan Spiegel communicated the same to Snap employees in an internal memo, along with an announcement on tightening the costs and slowing down hiring.
“Like many companies, we continue to face rising inflation and interest rates, supply chain shortages and labor disruptions, platform policy changes, the impact of the war in Ukraine, and more,” Spiegel opened. “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.”
The company now expects to hire “more than 500 new team members between now and the end of the year,” on top of the 900 offers already accepted this year. In comparison, the firm added 1,800 employees in 2021.
“We will also evaluate the remainder of our 2022 budgets and leaders have been asked to review spending to find additional cost savings,” Spiegel added.
In April 2022, the company reported its Q1 2022 financials, highlighted by a quarterly revenue of US$1.06 billion and an adjusted EBITDA of US$64.5 million coming from a wider net loss of US$359.6 million. It was then that the company announced its Q2 2022 guidance of 20%-25% year-on-year growth for revenue and breakeven to US$50 million in adjusted EBITDA.
Also in April 2022, the firm launched a “pocket-sized” flying camera called Pixy meant to complement its app Snapchat. The device retails in the US at US$229.99.
Snap last traded at US$13.61 on the NYSE.
Information for this briefing was found via Bloomberg, Seeking Alpha, The Verge, CNBC, and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
