In extended trading on Thursday, Snap shares fell more than 25% after the social media firm revealed poor Second-Quarter earnings and announced intentions to reduce recruiting as a result of slowing revenue growth. Evan Spiegel, the CEO and Bobby Murphy, the head of technology, have agreed to new employment contracts that will keep them in their positions until at least January 2027.
Snap stated in its investor letter that it is withholding third-quarter forecasts because “forward-looking visibility remains exceedingly tough.” According to the business, income for the time period to date is “roughly flat” from the same period last year. According to Refinitiv, analysts predicted a third-quarter sales rise of 18%. In the letter, the business stated that “despite the present challenges, we are not content with the outcomes we are providing.
The business announced that it will “significantly decrease our rate of recruiting, as well as the rate of operational expenditure increase” going forward. Snap cited slowing demand for its online ad platform as the reason for its underwhelming performance. A difficult economy, Apple’s 2021 iOS release, and more competition from businesses like TikTok have all caused advertisers to cut back on their investment. Snap said that the “input cost pressure due to inflation” was causing even some very robust enterprises to scale down their commitments.