Snap stock plunges on bad quarterly results

Snapchat founder and CEO Evan Spiegel says parent company Snap continues to face 'significant headwinds' when it comes to acceleration

Snapchat founder and CEO Evan Spiegel said parent company Snap continues to face ‘significant headwinds’ when it comes to growing revenue.

Shares of parent company Snapchat fell more than 14% on Tuesday after the company reported a loss for the last three months of last year as revenue appeared to stagnate.

In what may be a harbinger of pain to come for other tech companies like Google and Meta, which rely on digital ads to make money, Snap says it lost $288 million for the quarter just ended as revenue remained essentially flat at $1.3 billion.

The earnings report showed Snap’s losses for the full year nearly tripled to $1.43 billion from 2021.

“Snap is a canary in the coal mine, and its fourth-quarter earnings paint a disturbing picture of the state of the social advertising market,” said Insider Intelligence principal analyst Jasmine Enberg. “.

“Advertisers continued to pull back on social media ad spend in Q4, because economic challenge still exists, and social platform continues to be reeling from Apple’s privacy changes.”

Facebook parent company Meta and Alphabet-owned Google, the lions of the online advertising market, will report earnings this week.

Financial analysts had expected Snap to turn a profit in the quarter just ended.

“We continue to face significant headwinds as we seek to accelerate increase the revenue“, Snap CEO Evan Spiegel said in an earnings release.

“We’re making progress in driving improved return on investment for advertisers and innovating to boost our community’s engagement.”

The online platform ended last year with 375 million daily active users, up 17% from 2021, according to Spiegel.

“Snap’s secret weapon is its audience,” Enberg said.

“Snapchat User is an integrated research and development tool for Snap’s (augmented reality) long-term ambitions.”

According to the analyst, Snapchat managed to increase user rankings last year, but that growth came from parts of the world outside of the US, where it makes less money from its audience.

Snap last August confirmed plans to cut staff by 20%, as the photo-centric messaging app has worked to grow on its own amid competition and a revenue crunch.

Impressing young internet users in its early days, Snapchat is still a small player in this market. social network space as competition from other apps, such as TikTok, is getting fiercer.

Like other social networks, Snap has taken a hit as advertisers tighten their belts, and Apple’s new privacy changes have hit sales of expensive but targeted ads. high of companies.

© 2023 AFP

quote: Snap stock drops due to bad quarterly results (in 2023, Feb. 1) retrieved Feb. 1, 2023 from -results.html

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