![]() However, the company’s once-robust momentum has since experienced a swift decline. To provide a backdrop, Snap burst onto the scene with great fanfare when it made its debut on the public market in 2017, carrying the promise of exponential growth. This situation can be summed up as a slowdown in revenue growth coupled with increasing costs, leaving Snap in a difficult position where achieving consistent profits seems out of reach. Snap finds itself caught in a puzzling dilemma, a combination of factors that present a significant challenge. This theme was once again present in the company’s most recent results, with net losses yet to shrink. The consequence of this persistent need has unfortunately resulted in frequent debt and share issuances, thereby eroding the company’s balance sheet and diluting the value of each shareholder’s stake. Snap has constantly needed fresh cash to stay afloat, as profitability has yet to be achieved. While the company has managed to grow its revenues since then, it has come at a great cost. Snap on Thursday also announced a share buyback program of up to $500m.Snap ( NYSE: SNAP) has developed an established track record of shareholder value destruction since its IPO in 2017. It added it expects Snapchat daily active users to grow to 375 million in the fourth quarter.Īdjusted earnings per share were 8 cents during the third quarter, beating analyst expectations of breakeven. Snap said advertising revenue has historically followed the growth and engagement of its user base and “we remain optimistic about our long-term opportunity”. The Santa Monica, California-based company said it would refocus on growing its user base, diversifying its revenue sources and investing in augmented reality technologies, which overlay computerised images onto the real world.ĭaily active users on Snapchat rose 19 percent year-over-year to 363 million during the quarter. Snap announced in August it would lay off 20 percent of all employees and discontinue projects, such as gaming and a flying camera drone, to cut costs and steel itself against a deteriorating economy. The figure narrowly missed analysts’ expectations of $1.14bn, according to IBES (Institutional Brokers’ Estimate System) data from Refinitiv. Revenue for the third quarter, which ended September 30, was $1.13bn, an increase of 6 percent from the same quarter in the previous year. The ability to forecast future quarters remains challenging, Snap said. The company said its internal forecast estimates that revenue for the fourth quarter, which includes the holiday season when advertisers ramp up activity, will be flat from the previous year. “We expect that the operating environment will continue to be challenging in the months ahead,” the company said. In a letter to investors, Snap said inflation caused some advertisers to reduce their marketing budgets. Altogether the sell-off in late trading erased more than $50bn in stock market value from internet advertisement companies. Shares of other companies that sell digital advertising also dropped, with Meta Platforms down more than 4 percent, Alphabet down 2.7 percent and Pinterest losing nearly 8 percent. Snap’s poor results knocked more than $4bn off its market capitalisation in trading after the bell. Snap is the first of the big tech firms to report quarterly earnings and the results cast a shadow for other platforms that rely on advertising revenue such as Facebook owner Meta Platforms Inc, Alphabet’s Google and Pinterest, which report their results next week. Shares of Snap dropped 25 percent in after-hours trading on Thursday. ![]() The owner of photo-messaging app Snapchat, Snap Inc, has posted its slowest revenue growth since going public five years ago as advertisers cut spending amid rising inflation and the war in Ukraine.
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