When it emerged in 2011, the Snapchat threatened to clash with the powerful Facebook and Twitter. A little more than a decade later, the social network of temporary photos lost its shine, but it returned to annoy competitors, only now for another reason.
Today, Snap CEO Evan Spiegel announced in a note to employees that the company will not even be able to meet the bottom of this quarter’s adjusted earnings and earnings targets.
If investors abroad had any optimism left to start trading this Tuesday (24), Spiegel’s statement came to eliminate it and feed fears about the risks of a slowdown in the world economy.
In addition to driving down Snap’s shares on the New York Stock Exchange, which dropped more than 30% during the premarket, the company’s CEO’s announcement also contaminated the shares of big techs and the leading US technology index, the Nasdaq.
At around 11:10 am, SNAP was down 39.74% on the NYSE, quoted at $13.54. In 2022, the papers accumulate a devaluation of around 71%.
Twitter shares also fell – albeit smaller – of 3.43% this morning in New York.
Meanwhile, shares in Meta, owner of Facebook and Instagram, fell 9.72% at the same time. Alphabet, which manages Google, was down 7.55%, followed by Amazon shares, which fell 5.00% on Nasdaq.
And speaking of the US technology exchange, the index deepened the drops seen before the markets opened to 3.47%, at 111,135 points.
The Downfall of Snapchat
Snap CEO Evan Spiegel justified the possibility of delivering a weaker balance sheet in the current quarter with the deterioration of the macroeconomic scenario. Spiegel highlights escalating inflation and interest rates, as well as the impact of the war in Ukraine and supply chain shortages.
“The macro environment deteriorated even faster than we anticipated when we issued our guidance quarterly last month. As a result, while our revenue continues to grow on an annual basis, it is advancing more slowly than we currently expected,” Spiegel said in the letter.
According to the projections (guidance) of the company released in April, the Snapchat owner expected revenue to rise between 20% and 25% year-over-year.
As for adjusted Ebitda (earnings before interest, taxes, depreciation and amortization, in Portuguese), the projection ranged from US$ 0 to US$ 50 million.
“We now believe it is likely that we will report revenue and adjusted Ebitda below the lower end of the guidance range we provide for this quarter.”
Fewer Snap hires
The statement from Snap CEO Evan Spiegel also indicated that the company will slow hiring until the end of the year to manage expenses.
Spiegel said the company will not stop recruiting new employees, but that it will slow the pace of hiring for the rest of 2022.
Now, the CEO’s estimate is to add 500 new employees to the Snapchat team by December. In the last 12 months, the company closed approximately 2 thousand hires.
*With information from CNBC