Shares of the social media company Snap Inc. (NYSE:SNAP) plunged as much as 30% in extended trading Monday after warning that it may miss its second-quarter guidance and cut its revenue and profit forecasts below the low end of previous expectations.
If the move holds, the camera company with its flagship product, Snapchat, will lose about $10 billion in market value.
As part of expense management, CEO Evan Spiegel hinted in an internal memo to employees that the company will also slow hiring, filling 500 roles before the end of the year.
Over the 12 months, the company hired about 2,000 employees.
In the SEC filing Tuesday, Spiegel wrote in a separate letter,
"today we filed an 8-K, sharing that the macro environment has deteriorated further and faster than we anticipated when we issued our quarterly guidance last month." He added, "while our revenue continues to grow year-over-year, it is growing more slowly than we expected at this time."
In its first-quarter earnings report in April, Snap said that it expected between 20% and 25% year-over-year growth, already missing Wall Street predictions for sales and profit. It expected adjusted EBITDA to come in between break-even and $50million in the second quarter.
The news also impacted other internet and advertising stocks, with Meta Platforms Inc. (NASDAQ:FB) falling 7% in early trading Tuesday, Twitter (NYSE:TWTR) fell nearly 4%, and Pinterest (NYSE:PINS) slid 12%.
According to Loup Funds Managing partner Gene Munster, Snap Inc.'s gloomy forecast revision is not an isolated event but a broader trend.
Overall, social media stocks are on course to shed more than $100 billion in market value following the warning, adding to fears for the sector, which is already suffering amid user growth and rate-hike concerns.
Following the outlook, JMP Securities analyst Andrew Boone maintained a Buy rating on the stock but decreased the price target from $50 to $45 based on his reduced estimates.
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