Snap (SNAP:NASDAQ) shares plummet on weak revenue, provides no guidance for coming quarter

Snap (SNAP:NASDAQ) shares slid more than 14% in extended trading on Tuesday after the social media company reported fourth-quarter revenue that trailed analysts’ estimates. earnings for the quarter

Earnings for the quarter came in at 14 cents per share, surpassing Wall Street’s expectation of 11 cents expected. Revenue in the fourth quarter was up slightly from a year earlier to $1.30 billion, a little shy of $1.31 billion. analysts expected. For the full year, sales rose 12% to $4.6 billion in 2022.

Snap’s net loss widened to $288 million in the fourth quarter, a stark change from the year-ago period when the company posted its first-ever quarterly profit. The figure also represents a bigger loss than Wall Street had been anticipating. Snap declined to provide a formal top-line outlook or adjusted earnings forecast given market conditions.

Snap said the number of daily users active on its platform was up 17% in the fourth quarter, suggesting the app still resonates with users at a time Mr. Musk is trying to revitalize Twitter and short-form video platform TikTok continues to lead Snap in app downloads.

The company said it added about 500,000 users to its new subscription service Snapchat+ and that monthly active users are were up more than 30% year-over-year on its TikTok competitor called Spotlight.

In a letter to investors, Snap called it a “challenging year” that was marked by “macroeconomic headwinds, platform policy changes, and increased competition. It’s the third disappointing earnings report in a row for Snap investors.

The day after the company’s Q3 earnings report in October, shares fell 28% on disappointing revenue. The stock lost 39% following its Q2 report in July after it missed on both top and bottom lines.

The company, in October, said sales for the quarter at the time were up about 9% from the year-prior period, though it warned that business was “highly likely” to decelerate over coming weeks. The company didn’t provide any formal guidance for the period given uncertain market conditions.

Like social media peers Meta (META:NASDAQ) and Twitter, Snap had a rough 2022 as a slowing economy led businesses to slash their digital ad budgets and Apple’s (APPL:NASDAQ) iOS privacy update limited targeting capabilities

Snap reacted to the deteriorating conditions in August by slashing 20% of its staff. Meta and Alphabet followed months later with their own plans for job cuts. It also led the way in other cost-saving moves, sunsetting projects not deemed core, including its flying camera drone and in-house “Originals” programming.

Snap’s stock plummeted 81% last year as the Nasdaq Composite had its worst year since 2008. The stock has recouped some of its losses, rising 29% in January, along with a broader rally in the tech sector.

Alphabet’s Google (GOOG:NASDAQ), the world’s largest digital advertising platform, has long fared better than other ad-dependent companies because brands consider ads on Google searches crucial to driving website visits or other consumer actions.

Similarly, Meta has said in previous quarters that the bulk of its revenue comes from direct response advertising. Facebook and Instagram reach billions of users, turning them a key part of the marketing strategies of many brands.

The weak outlook pulled down the shares of rivals Meta, Google, and Pinterest (PINS:NYSE), which also earns revenue by selling digital advertising. Meta shares dropped 2% after Snap’s report. Pinterest, which releases results next week, fell almost 5%.

Analysts expect Meta to report a 6.5% fall in December quarter revenue when it reports results on Wednesday, according to Refinitiv, its third consecutive quarter of decline. Alphabet will report results on Thursday, and analysts expect revenue to be unchanged from a year earlier.