Snap Misses Q1 Targets And Warns Of More Advertising Struggles In Months To Come
Snap Inc. is continuing investors’ roller-coaster ride with another stomach-churning plunge downward.
The parent company of Snapchat missed Wall Street forecasts for the first quarter, reporting a 7% dip in total revenue to $989 million as net losses per share narrowed by a penny to 21 cents.
After riding high during the pandemic, as advertising on social media surged, the company got hit hard in 2022 by the broad pullback in advertising. While the company did not offer financial guidance for the second quarter, it indicated that challenges in advertising would continue, particularly as the company changes its formatting in pursuit of a better experience for both customers and advertisers.
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“While the macroeconomic environment has shown signs of stabilization, it continues to be a headwind to growth,” Snap wrote in its quarterly investor letter. “Our brand-oriented business was down 12% year-over-year and our direct-response business was down 9% year-over-year.” Policy changes by tech platforms like Apple where Snapchat customers use the social media app have delivered a blow to direct response revenue, the company acknowledged.
While Snap has taken steps to respond to these challenges on direct response, “it will take time for these improvements to translate into improved topline growth,” the letter said.
Daily active users hit 383 at the end of the quarter, rising 15% from a year ago and matching Wall Street expectations.
Shares in Snap, which had a high-profile IPO in 2017, plunged 18% on the earnings news. They have traded at around the $10 mark since last July but fell to about $8.50 after the discouraging financial report.
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