Stock Market

Snap suffers worst sales growth yet in holiday quarter, stock plunges after earnings miss

Snap Inc. stumbled through another bleak quarter to end 2022 and executives refused to provide guidance Tuesday, sending shares sliding.

In a potential barometer of what’s to come from advertising-dependent internet companies, Snap

on Tuesday posted a loss of more than a quarter-billion dollars in the holiday quarter and declined to provide a forecast for the current quarter, which is likely to rattle investors in Meta Platforms Inc.

and Alphabet Inc.’s


Google, both of which report financial results later this week. Shares of Meta sunk 2% on the news.

Snapchat’s parent company reported fourth-quarter revenue of $1.3 billion, flat with a year ago, the worst year-over-year revenue growth Snap has ever reported. The company said it lost $288.5 million, or 18 cents a share, compared with earnings of a penny a share last year.

Analysts polled by FactSet had predicted revenue of $1.3 billion and a loss of 11 cents a share. Shares plunged more than 14% in after-hours trading immediately following the release of the results, after closing with a 4.2% increase at $11.56, their best closing price since November.

“It seems our advertisers are really watching their spending,” Snap Chief Executive Evan Spiegel said during a brief conference call with analysts late Tuesday.

“Over the past year, we’ve noted a number of factors that have impacted our revenue growth, including macroeconomic headwinds, platform policy changes, and increased competition,” Snap said in a letter to investors. “These challenges persisted throughout Q4 and combined to create a difficult operating environment. Overall, revenue generation in Q4 materialized largely as expected, with revenue growth flat year-over-year.”

Snap executives warned last year that marketers were lowering their budgets amid economic uncertainty, after they laid off roughly 20% of employees in the summer, months before other tech companies began cutting. 

“The deterioration in Snap’s business has been alarming, with rev growth decelerating for 7 straight quarters to [an estimated] ~0% in Q4 (from 116% in Q2’21),” Jefferies analyst James Heaney wrote in a note to clients this week.

The downturn in digital advertising as well as the threat from TikTok has contributed mightily to layoffs at Snap, Meta and Google. That is why investors are eager to know where executives expect the industry to head in the coming months and year, but Snap executives declined to provide specific financial projections.

“Given uncertainties related to the operating environment, we are not providing our expectations for revenue or adjusted EBITDA for the first quarter of 2023,” they wrote in Tuesday’s release.

Shares of Snap have sunk 66% over the past 12 months; the broader S&P 500 index

is down 10% in the past year.

Checkout latest world news below links :
World News || Latest News || U.S. News

Source link

Back to top button