Snap said macroeconomic headwinds hit advertising revenue.
Richard Drew/AP
Snap’s reported revenues only rose 6% from a year to $1.13 billion in the third quarter of 2022.
It was Snap’s slowest quarterly growth ever and its sales missed market expectations.
Shares slumped 27% in after-hours trade.
Snap Inc. shares slumped by almost 30% in after-hours trade, after the company reported its slowest quarterly revenue growth ever.
The social media company on Thursday, reported that its revenues rose 6% from a year to $1.13 billion in the third quarter of 2022 — missing expectations of $1.14 billion, according to IBES data from Refinitiv. Its net loss widened five times to $360 million, compared to $72 million in the same period a year ago.
Snap told investors that although the app’s daily active users rose 19% to 363 million in the third quarter from a year ago, but advertisers were holding back on spending, due to a challenging macroeconomic environment.
It also faces stiff competition from TikTok, as Dan Whateley, Lucia Moses, and Lindsay Rittenhouse reported in July.
“We are finding that our advertising partners across many industries are decreasing their marketing budgets, especially in the face of operating environment headwinds, inflation-driven cost pressures, and rising costs of capital,” it said.
Users in Snap’s key market — the US — spent 5% less time viewing content in the third quarter, compared to a year ago, the company said. US Snapchatters were also engaging less with “Stories” posted by their friends, it added.
Snap also did not issue a detailed guidance for the fourth quarter, saying “forward-looking revenue visibility remains incredibly challenging.”
The Santa Monica, California-based company— which said in August that it was laying off 20% to 25% of its workforce — expects the operating environment to stay challenging in the months ahead. The company expects the restructuring would save $500 million in annual costs.
The reorganization would help Snap “better meet the challenges of the current environment and to make as much progress as possible as quickly as possible in the areas of our business that we are able to control,” Snap CEO Evan Spiegel said in an earnings call with analysts, according to a transcript of the call.
Snap Inc. shares slumped 27% to $7.87 in after-hours trade after closing 0.64% lower at $10.79 on Thursday. This means Snap has lost $4 billion in market cap after the markets closed.
The stock is down about 77% this year, so far.