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Snap says economy deteriorated fast, slashes forecast, stock plummets

Stock Markets May 24, 2022 05:20AM ET
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2/2 © Reuters. FILE PHOTO - Traders gather at the post where Snap Inc. is traded, just before the opening bell on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 11, 2017. REUTERS/Brendan McDermid 2/2

By Sheila Dang

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

Since late April, "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," the company said in a U.S. securities filing.

Shares of Snap (NYSE:SNAP) fell 31%, Alphabet (NASDAQ:GOOGL) dropped 3.6% and Amazon (NASDAQ:AMZN) dropped 2.2%. Nasdaq futures also fell, with traders blaming Snap.

U.S. stocks had ended higher on Monday, led by gains from banks and tech, but the rise follows Wall Street's longest streak of weekly declines since the dotcom bust more than 20 years ago and many investors remain on edge.

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

"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," he wrote.

Last month, Snap forecast second-quarter revenue growth of 20% to 25% over the previous year.

The news follows statements by companies including Uber Technologies (NYSE:UBER) Inc and Facebook-owner Meta Platforms Inc earlier this month that they would rein in costs and hiring.

In the memo, Spiegel said Snap would evaluate the rest of this year's budget and "leaders have been asked to review spending to find additional cost savings."

Some planned hiring will be pushed into next year, though the company still expects to hire more than 500 people by the end of this year, he said.

Snap says economy deteriorated fast, slashes forecast, stock plummets
 

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Comments (4)
jason xx
jason xx May 24, 2022 5:49AM ET
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Who just randomly comes out with a statement like this? How come company's that actually make things aren't claiming this?
jason xx
jason xx May 24, 2022 5:45AM ET
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What do supply chain and macro economics have to do with snapchat? How did the economy deteriorate so bad in the last month?
Matt Brackley
Matt Brackley May 23, 2022 10:12PM ET
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Dont worry we are just making all those weekly options worthless we sold today. Thank you.
Larry Langley
Larry Langley May 23, 2022 10:00PM ET
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Why did he sabotage his company and the market? Their earnings was recent and did well. So why weeks later make this statement that goes against very recent earnings?
Keith Wilson
Keith Wilson May 23, 2022 10:00PM ET
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Because he is rich and doesn't give a rat. He's got options as far as the eye can see
Larry Langley
Larry Langley May 23, 2022 10:00PM ET
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seems like alternative motive or why suddenly broadcast to the world you lied during earnings and weeks later the sky is falling.
jason xx
jason xx May 23, 2022 10:00PM ET
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They didn't even have earnings? I don't understand how they are dependent on the supply chains? They are an online company?
 
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