The shares of Snap Inc. the parent company of photo-sharing platform Snapchat fell as much as 25 per cent after the social media company reported disappointing second-quarter results. Additionally, Snap Inc. announced that it was slowing down hiring and looking for new avenues to generate revenue.
Snap’s revenue in Q2 stood at $1.11 billion which missed the projected mark of $1.14 billion. The revenue increased 13 per cent from last year but fell short of the expected growth rate of 16 per cent.
However, what broke the investor’s confidence was Snap informing in its investor letter that the company was not looking to provide any guidance for the third quarter because ‘forward-looking visibility remains incredibly challenging’.
“The second quarter of 2022 proved more challenging than we expected. We are not satisfied with the results we are delivering,” said the company in the letter.
Reportedly, the disruption in the supply chain, labour shortage and record inflation has forced advertisers to pull the plug on their advertising budgets. This has directly affected Snap Inc’s revenue according to the company officials.
The new Apple 2021 iOS privacy update, along with the meteoric rise of short-video platforms like TikTok has further caused the downturn in Snap’s growth plans.
While Snapchat announced a temporary hiring slowdown, Co-founders Evan Spiegel, the CEO, and technology chief Bobby Murphy received new employment contracts that keep them at the helm of the company till 2027.
Spiegel and Murphy will receive an annual salary of just $1 and no equity compensation, after reviewing the dismal numbers.
However, it’s not only Snapchat that is feeling the heat of a wobbly economy. After Snap’s announcement, Meta, Facebook’s new alter-ego fell more than 5 per cent while Google and Twitter dropped as much as three and two per cent respectively.
Twitter is expected to release its quarterly numbers today and given the way the entire Elon Musk saga has unfolded, the market is not expecting any good news.
(With inputs from agencies)
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