After-hours trading on Thursday saw Snap's share price drop 26% as the company reported an earnings loss of $422 million and a "substantially" reduced hiring rate.

A huge loss of $422 million led to the stock crash: This is 17% greater than the loss of $360 million in Q1 and nearly double the loss of $152 million in the second quarter of 2021.

The numbers were not all bad, though. Its revenue rose slightly over the first quarter's $1.06 billion to $1.11 billion, but fell short of Wall Street's $1.14 billion prediction.

A 4.5% increase in Snap's daily active users was also reported, with 347 million daily active users, an increase over 332 million recorded in Q1 and above the 343 million expected by Wall Street.

Inflation and rising interest rates contributed to Snap's growing losses, in addition to decreased demand caused by a decline in advertising revenue.

Derek Andersen, Snap's chief financial officer, said on Thursday afternoon that the company must reduce operating expenses, which will result in a "significant pause" in recruitment.

On the earnings call, Snap executives said they would concentrate on diversifying revenue streams and investing in augmented reality features, which Andersen called Snap's longest-term opportunity.

Snap's investor letter reveals the second quarter of 2022 was tougher than expected. Q2's results do not reflect our ambitions. Despite current headwinds, our results aren't satisfactory."