Shares of Snap (SNAP) plunged nearly 40% in early trading Tuesday after Snap CEO Evan Spiegel told employees that the company would significantly slow hiring for the rest of the year and warned investors that its revenue wouldn’t grow as fast as expected.

In a memo to employees, Spiegel said that rising inflation and interest rates, supply chain shortages, labor disruptions, the impact of the war in Ukraine, and Apple’s new privacy policies hit revenues. He said that Snap expects to report revenue below the lower end of guidance it gave investors. 

“While Spiegel blamed macro economic forces like inflation and rising interest rates for softness in Snap’s outlook, the reality is that all social media platforms are suffering from declining engagement. Fixing inflation or an end to the war in Ukraine won’t change that secular trend,” stated Caleb Silver, Editor-in-Chief of Investopedia.

Spiegel said Snap plans to hire 500 more people this year compared to the 2,000 new people it hired over the past year. 

In April, Snap reported first quarter earnings that missed analyst estimates for sales and profits. It said then that it expected up to 25% growth in revenue.

Shares of Snap competitors also fell on the news, with shares of Facebook parent Meta Platforms (FB) dropping 7%. Twitter (TWTR) shares fell almost 4%, while Pinterest (PINS) shares slid 12%. Snap shares were down over 50% for the year before the latest news.

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