Snap’s results reported missed second-quarter estimates on both the top and bottom lines, sending shares tumbling.
Instantaneous (SNAP) posted an adjusted loss of two cents on revenue of $1.11 billion. Analysts had expected a loss of 1 cent on revenue of $1.14 billion.
Snapchat’s parent company also declined to provide guidance for the third quarter and said it will “significantly slow our hiring rate, as well as the operating expense growth rate.”
SNAP stock tumbled 26% at around 12:10 p.m. during after-hours trading on the stock market today.
“While the continued growth of our community increases long-term opportunities for our business, our financial results for the second quarter do not reflect our ambition,” chief executive Evan Spiegel said, in written remarks with the earnings release. from Snap.
Spiegel said the disappointing results were due to slowing demand for its online advertising platform.
“We are evolving our business and strategy to accelerate revenue growth, including innovating our products, investing heavily in our direct-response advertising business, and cultivating new revenue streams to help diversify our growth. turnover,” he said.
Snap and the other social media companies derive about 97% of their revenue from advertising, which has slowed over the past year.
Late in other social media actions on Thursday, the Facebook owner Metaplatforms (META) fell 4.7%. In addition, pinterest (PINS) fell 6.9% while Etsy (ETSY) fell 3.1%.
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Signs of advertising weakness emerged when Snap released first-quarter results on April 21. This report, while showing a small lack on the top and bottom lines, came with a warning.
Challenges Reaching Instant Earnings
Advertisers from a wide variety of industry groups reported concerns related to the macro operating environment. These concerns include continued supply chain disruptions, rising input costs, economic concerns from rising interest rates, and geopolitical risk concerns from the war in Ukraine.
Another big problem is that Apple (AAPL) has changed ad tracking on its operating system. Consumers got more privacy, but advertisers lost valuable user tracking data. The change has cost social media stocks billions in lost revenue.
“SNAP’s commentary on prospective advertiser demand amid geopolitical, supply chain and inflation-induced headwinds will be critical,” Cowen analyst John Blackledge said in a report. research to customers ahead of Snap’s results report.
Please follow Brian Deagon on Twitter at @IBD_BDeagon to learn more about tech stocks, analysis and financial markets.
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