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Snap stock plummets on growing losses and ad problems

Snap’s revenue growth slowed in the third quarter, and losses soared. That’s as the company embarked on a sweeping restructuring to meet the challenges around targeted advertising and the broader industry downturn.

The Los Angeles-based company reported Thursday that revenue rose 6% year-on-year to $1.13 billion, just short of analysts’ expectations of $1.14 billion. It was the slowest pace of growth since the company went public in 2017.

Snap’s stock, which had already lost 77% of its value this year, fell 28% Friday morning.

Net loss of $360 million was broadly in line with expectations, up 400% from $72 million a year earlier. This includes laying off a fifth of his 6,500-strong workforce and reducing investment in initiatives such as augmented reality glasses and video content production. It included expenses of $55 million.

Snap, the developer of camera and messaging app Snapchat, said in a letter to investors that macroeconomic headwinds such as inflation and rising cost of capital have led advertisers to continue to cut marketing budgets. said. The company also blames increased competition and challenges surrounding Apple’s privacy changes for making it harder for apps to target ads and measure the success of campaigns.

The dismal results for Snap, the first of the big tech companies to report earnings, suggest other advertising-dependent companies may report similar pains in the coming weeks.

Facebook parent Meta and Google parent Alphabet fell 5% and 3% respectively, while smaller social media rival Pinterest fell more than 7% on the news.

“While these results are far from our hopes, we are taking advantage of this period of reduced demand to make changes to our advertising platform and auction dynamics that we believe will yield better results for our advertising partners in the long term. We are moving forward and accelerating,” said Snap. .

The company did not provide earnings or earnings guidance for the current quarter due to “uncertainties related to the business environment,” but said earnings increased 9% in the quarter so far.

Snap said it expects revenue growth to slow toward the end of the year. Assuming flat growth, the company estimates fourth quarter earnings before adjusted interest, taxes, depreciation and amortization to be approximately $200 million.

Snap CEO Evan Spiegel said: ”

The company said it had 363 million daily active users, up 19% year-over-year. The company also announced a program to repurchase up to $500 million of its Class A common stock.

https://www.ft.com/content/d5b7519f-1845-4f80-970f-8ebb7d679583 Snap stock plummets on growing losses and ad problems

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