Snap warns that it will not meet its revenue targets due to economic hardship.

Snap, creators of the messaging app Snapchat said Coping with difficult economic conditions on Monday, he expected it to fail to meet its quarterly financial targets.

Snap CEO Evan Spiegel said in an email to employees that the company is likely to miss its second-quarter revenue and adjusted profit targets. Snap will also slow its hiring process this year, the company still expects to add about 500 people, he said in an email obtained by the New York Times.

“Like many companies, we face inflation and rising interest rates, supply chain shortages and labor disruptions, platform policy changes, and the impact of the Ukraine war,” Spiegel wrote.

The warning caused Snap’s stock in after-hours trading to plunge nearly 30% after closing at $22.47. Snap declined to comment further.

Snap’s announcement comes as venture capital funding dwindles and tech startups’ growth slows as young businesses cut costs and lay off employees. Some social media companies were also affected by other factors, including changes to Apple’s privacy settings that compromised its ability to conduct targeted advertising. Facebook’s parent company, Meta, recently introduced temporary employment freezes for some positions.

Still, tech giants, including Microsoft, Apple, and Google, continue to spend huge amounts of money.

In April, Snap reported more than $1 billion in revenue for the first quarter, which fell short of Wall Street expectations. The company expects second-quarter revenue to increase 20-25% from $982 million in the same period last year.

“The macroeconomic environment is deteriorating faster than expected since the announcement of guidance on April 21, 2022,” said Derek Andersen, Snap’s chief financial officer. wrote In a brief statement filed with the Securities and Exchange Commission.

DA Davidson analyst Tom Forte said digital advertising, which makes up the majority of Snap’s revenue, is often the first to cut during times of economic uncertainty.

“Given growing challenges to the economy, including inflation in food and fuel prices, it is not surprising that Snap’s 2Q22 revenue is expected to fall short of previous guidance,” Forte said.

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