By
Godfrey Benjamin
April 26th, 2024
While the reality has dawned on Snap, the company is exploring avenues to cut down its expenses in a bid to come out of the current crisis stronger.
The shares of American camera and social media company Snap Inc (NYSE: SNAP) have plunged by as much as 28.57% in the pre-market after closing Monday’s session at a 3.40% loss to $22.47 amid a dwindling revenue outlook. The selling spree from investors came as a result of a disclosure made by Chief Executive Officer, Evan Spiegel to its employees noting that the firm may not hit its own guidance as issued back in April.
“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,” Spiegel wrote in the note. “As a result, while our revenue continues to grow year-over-year, it is growing more slowly than we expected at this time.”
The firm following its last earnings report said it is expecting its annual revenue to grow between 20% and 25% respectively. However, the current macroeconomic outlook is casting doubts on the company’s own figures and Spiegel said its performance would likely taper towards the lower end of the estimate.
Based on this guidance, the company said it is expecting $0 to $50 million in adjusted earnings before interest, taxes, depreciation, and amortization.
“We believe it is now likely that we will report revenue and adjusted EBITDA below the low end of the guidance range we provided for this quarter,” Spiegel wrote in Monday’s update.
While the high level of inflation and rising interest rates come off as some of the core challenges that are impairing the company’s confidence in its future performance, the ongoing war in Ukraine has also taken its toll. Beyond all this, the privacy policy changes from Apple Inc (NASDAQ: AAPL) have also impacted the company’s business across the board.
SNAP to Cut Expenses amid Uncertain Revenue Push
While the reality has dawned on Snap, the company is exploring avenues to cut down its expenses in a bid to come out of the current crisis stronger.
One of the earmarked ways to do this is by slowing down its rate of hiring as Spiegel said in the note to employees. While there is an assurance of adding at least 500 people to the team, this pales when compared to the 2,000 new staff onboarded last year. Based on this, Spiegel is counting on the exceptionality of existing staff to help push forth its goals.
“Our most meaningful gains over the coming months will come as a result of improved productivity from our existing team members, as we work together and help our new team members get to know Snap and learn how to contribute to their full potential,” Spiegel wrote. “Through many ups and downs over the past decade you have made clear your ability to see through the short term and invest in our long term success.”
The losses experienced by SNAP reverberated across the social media and advertising world with Meta Platforms Inc (NASDAQ: FB) dropping 7.25% in the Pre-Market to $182.