Snap’s earnings reported falling short of second-quarter estimates on the top and bottom lines, sending the stock down.
Explode, Explode (Explode, Explode) reported an adjusted loss of two years on revenue of $1.11 billion. Analysts expected a 1 percent loss in revenue of $1.14 billion.
Snapchat’s parent company also declined to provide guidance for the third quarter and said it would “significantly slow our hiring rate, as well as our operating expense growth rate.”
SNAP stock collapsed 26% to about 12.10 during after-hours trading on stock market today.
“While the continued growth of our community increases long-term opportunities for our business, our second-quarter financial results do not reflect our ambition,” CEO Evan Spiegel said in written notes with Snap’s earnings statement.
Spiegel said the disappointing results were due to slowing demand for its online advertising platform.
“We are developing 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 line,” he said.
Snap and other social media companies get about 97% of ad revenue, which has slowed in the past year.
In the late trading of other social media shares on Thursday, the owner of Facebook meta pads (dead) decreased 4.7%. In addition to, Pinterest (pins) decreased 6.9% while Etsy (ETSY) decreased by 3.1%.
Signs of poor advertising appeared when I reported Snap First Quarter Results On April 21, this report came with a warning, while showing a slight error in the upper and lower lines.
The challenges of making windfall profits
Advertisers in a variety of industry groups have reported concerns regarding the overall operating environment. These concerns include continued supply chain disruptions, rising input costs, economic concerns due to rising interest rates, and concerns about geopolitical risks from the war in Ukraine.
Another big problem is that apple (AAPL) changed the tracking of ads on his operating system. Consumers gained more privacy but advertisers lost valuable user tracking data. The change has cost social media stock billions in lost revenue.
“SNAP’s hold on forward-looking advertisers’ demand amid geopolitical and supply chain conflict and inflation headwinds will be key,” Cowen analyst John Blackledge said in a client research report ahead of Snap’s earnings report.
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