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Snap Inc (NYSE: SNAP) posted its weakest-ever quarterly sales growth as a public company, sending its shares down 25% on Thursday.
Snapchat-parent company said revenue for the quarter ended June was $1.11 billion, falling short of analysts’ expectations of $1.14 billion, according to Refinitiv. Revenue grew 13% in the quarter.
Results of the tech company are a mirror to the effects of economic turmoil on digital-advertising market. Macroeconomic challenges and other business headwinds have forced companies to reduce their marketing budgets, proving a bane for the social media companies.
“We are not satisfied with the results we are delivering, regardless of the current headwinds,” Snap said in a statement.
The company plans to slow hiring and said it is also not providing guidance for the third quarter, given uncertainties related to the operating environment.
For the disappointing results, Snap blamed slowing demand for its online ad platform in a challenging economy, recent privacy changes by Apple Inc (NASDAQ: AAPL) and increased competition from companies including TikTok.
According to a recent update in Apple’s privacy policy, apps are required to seek permission from users to track them or share their data. The update has severely impacted social-media companies including Meta Platforms Inc’s (NASDAQ: META) Facebook and Alphabet Inc’s (NASDAQ: GOOGL) Google.
Decline in advertising spending has led the companies to search for other revenue options.
Snap recently launched Snapchat for Web, a web version of its photo messaging app, allowing users to chat, send photos and video call from their computers. The company, which has kept its service mobile-only for over a decade, said the feature would be exclusive to Snapchat+ subscribers in the United States, the United Kingdom, Canada, Australia and New Zealand.
In May, Snap said it would not be able to meet the second-quarter guidance that it set only a month earlier, due to problems in the advertising business. Its shares tumbled 43% on the warning.
The results of the social-media company, whose stock has lost almost two-thirds of its value in 2022, led to a loss of about $80 billion in combined stock market value of tech companies including Meta and Alphabet on Thursday.
Snap Chief Executive Evan Spiegel and Chief Technology Officer Bobby Murphy entered an agreement to serve in their roles through at least Jan. 1, 2027. The co-founders also agreed for a $1 salary and no equity compensation.
The company also announced a $500 million stock buyback through the next year.
Picture Credits: Reuters
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