Quarters follow and look alike at Snap… For the third time in three quarters, the disappointing results of Snapchat’s parent company are penalized on Wall Street, dragging down the titles of other social networks. Snap plunges more than 25% on Wall Street and is now losing 90% of its value in one year.
The company reported revenue of $1.13 billion for the past quarter. Not only lower than analysts’ expectations (the Refinitiv consensus was counting on billings of $1.14 billion), it is, moreover, up only 6% over one year. And it is the first time since its IPO in 2017 that the firm has recorded limited single-digit growth. Good surprise, however, on the side of adjusted earnings per share, which stands at 8 cents against an anticipated loss of 1 cent. The net loss has widened to 360 million dollars, multiplied by five in one year.
Of the snapchatters less engaged
Still, Snap hasn’t lost any users. They are even 19% more to use the application with the ghost icon than a year ago. The problem lies elsewhere, Snap said in a letter to its investors: “We are finding that our advertising partners, in various industries, are cutting their marketing budgets amid headwinds of inflation and rising cost of capital. “.
A reduction in advertising revenue also linked to phenomena other than inflation or rate hikes by central banks… “The online advertising industry is doing poorly, but most of the headwinds plaguing Snap are very much unique to the company itself,” explains in a note Mark Mahaney, analyst at Evercore ISI. First, a weaker commitment of the 363 million snapchatters dailies. The company points out that in the United States, its main market, the time spent watching content on the application fell by 5% over the quarter and that users reacted less to the “stories” of their friends.
Heckled by TikTok and Apple
Did they leak on TikTok? In any case, this is what Scott Kessler, an analyst at Third Bridge Group, points out: “One of the main reasons for Snap’s difficulties is direct competition from TikTok, in terms of users, usage, ads. And while Snap seemed to be back on its feet, TikTok was investing and growing, and very aggressively.” Finally, Apple’s new privacy rules, requiring permission from iPhone users for their advertising ID to be known by the app, reduce the company’s ability to sell targeted advertising data. .
The company, in any case, refrained from giving forecasts for the fourth quarter. It will continue its cost reduction plan, for which it announced in August that it was laying off 20% of its workforce, or around 6,000 employees. What, hopes Snap, save 500 million dollars a year, reports the Bloomberg agency.