Shares of social media company Snap Inc. plunged more than 25 percent in Thursday’s extended trading after the company reported disappointing second-quarter results and announced plans to slow hiring.
The company, like many others, has decided to slow down hiring so as to manage costs and its weakening revenue growth. The company’s co-founders Evan Spiegel and Bobby Murphy who are CEO and CTO respectively, agreed to new employment contracts that’ll keep their positions lockdown till at least January 2027. Spiegel and Murphy will receive an annual salary of $1 and no equity compensation for their new employment contracts.
Snap Inc. reported a loss of 2 cents for adjusted earnings per share for the second quarter. Analysts had expected a loss of 1 cent according to Refinitiv. Revenue for the quarter came in at $1.11 billion, falling short of the $1.14 billion expectation of analysts, according to Refinitiv. Revenue was up 13 percent from the same period a year ago, while expectations from analysts had been a growth of 16 percent.
Global daily active users (DAUs) for the quarter came in at 347 million and surpassed the 344.2 million that analysts had forecasted, according to StreetAccount.
Snap Inc. failed to provide guidance for the third quarter. The company said in its investor letter that it wasn’t providing third-quarter guidance because “forward-looking visibility remains incredibly challenging.” The company said that revenue has been “approximately flat” from the same period in the previous year. Analysts, however, forecast an 18 percent growth in sales for the third quarter, according to Refinitiv.
The company expresses its dissatisfaction with its second-quarter results in its shareholders’ letter. “We are not satisfied with the results we are delivering, regardless of the current headwinds,” the company wrote.
Like many other companies, Snap had to deal with macroeconomic challenges and uncertainties. “The second quarter of 2022 proved more challenging than we expected,” the company wrote in its shareholders’ letter announcing plans to “substantially slow our rate of hiring, as well as the rate of operating expense growth.”
The company also blamed its disappointing results on declining demand for its online ad platform and increasing competition from platforms like short video sharing platform TikTok. The company also announced a stock repurchasing program of up to $500 million.
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Ibhadojemu Lucky Emmanuel is a graduate of Education and Economics from the University of Benin. He has a passion for tech and business and has been writing professionally for over a period of five years. He's written across various topics and segments and knew tech-business was it when he first stumbled on it. He has a great passion for music and arts, and wants to visit as many countries as he can someday.
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