New York (awp/afp) – Snap, the parent company of the popular messaging app Snapchat, collapsed by almost 40% on Wall Street on Friday after results deemed disappointing, sending nearly 8 billion in stock market value up in smoke in one session.
Snap, which widened its losses to $422 million in the second quarter and announced a slowdown in hiring on Thursday, dropped 39.08% to $9.96.
Its market valuation plunged dramatically: it fell from some $24 billion the day before to $16.3 billion on Friday, melting nearly $8 billion in one day.
A year ago, before the stock market collapse, Snap, then a Nasdaq darling introduced to the market in 2017 at a price of $17, had a stock market value of $118 billion. The social network has never yet recorded annual profits.
Snapchat, which nevertheless has 347 million daily users – 18% more than a year ago – was sanctioned by investors, frightened by the comments of its management which intends to drastically tighten its belt in a context of reduction advertising expenses.
“We will substantially slow down the pace of recruitment (…) and we will also take a close look at our operational expenses,” said Derek Andersen, Snap’s chief financial officer, the day before, while the two founders of the network, Bobby Murphy and Evan Spiegel, will now be paid for 1 symbolic dollar annually until 2026.
Above all, not only did its revenues remain “flat” last quarter, but the company left analysts in the dark for the next one, citing an “incredibly difficult” environment.
No less than a dozen brokerage firms had degraded their appreciation of the action, starting with JP Morgan Securities which was now betting on a price of 9 dollars per share instead of 24, indicated in a note an analyst from Schaeffer’s Investment Research.
Ad revenue at half mast ___
The application, first popular among the youngest, is suffering from a reduction in brand advertising expenditure but also from Apple’s regulatory change, which requires obtaining the consent of users before tracking them in their Internet browsing. advertising targeting purposes.
“Snap has given us another disastrous quarter,” summed up Dan Ives of Wedbush Securities, interviewed by AFP.
These results “highlight a slowdown in digital advertising and the headwinds brought by Apple’s iOS privacy policy,” the analyst said.
That said, he said, Snap is to be compared to “a paper plane in the storm which does not represent a phenomenal barometer of the rate of slowdown in advertising for platforms like Facebook or Google”.
The fall in the title nevertheless depressed the Nasdaq index, which is dominated by technology, which ended down 1.87%.
It rubbed off on Meta (Facebook) which fell 7.59% to 169.27 dollars and on Google (Alphabet) down 5.81% to 108.36 dollars. The two web giants, which feed on digital advertising among other things, will announce their results on Tuesday and Wednesday respectively.
“Times are tough for Snap and it remains to be seen if many competitors and peers will suffer similar things,” commented Scott Kessler of analyst firm Third Bridge.
Snap remains a small player in the global digital advertising market.
The application “represents less than 1% of global revenue (…), which makes it more sensitive to constraints than larger players like Meta”, underlined Jasmine Enberg, from Insider Intelligence.
The company has nearly 6,500 employees, 38% more than a year ago.
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