Snapchat was able to reduce its losses, but it is not coming out of the red.
(Photo: dpa)
Los Angeles The company behind the popular photo app Snapchat lost around a quarter of its value in one fell swoop after falling short of sales expectations last quarter. Snap increased sales by 57 percent year-on-year to around $ 1.067 billion (920 million euros). On the market, however, more than 1.1 billion dollars were expected. The company only narrowly missed that below its own forecast of $ 1.07 billion. Snap blamed the data protection changes on the iPhone, among other things, for missing the forecast.
Investors, however, were not interested in the fact that the difference to the forecasts was small. Within minutes, the price fell 30 percent in after-hours trading on Thursday, dragging other social media values down with it. Facebook and Twitter, both of which will present their quarterly figures next week, initially lost six and seven percent.
A few months ago, Apple introduced new rules according to which app developers must explicitly ask users for permission if they want to track their behavior across different applications and services for advertising purposes. According to surveys, most users reject this, which causes some previous advertising models to falter.
While Facebook has long sharply criticized Apple’s plan, Snap has so far been forgiving. However, the Snapchat creators have now stated that an alternative software tool provided by Apple for calculating advertising data has not proven to be reliable.
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Still in the red
Delivery bottlenecks and a labor shortage also made Snap indirectly difficult because many advertisers affected by these problems cut their advertising budgets. On Snapchat there are mainly advertisements for fashion and cosmetics as well as for consumer goods.
Meanwhile, the number of daily active users on Snapchat rose within three months from 293 to 306 million. Bottom line, Snap posted a loss of nearly $ 72 million in the third quarter – a significant improvement compared to the loss of around $ 200 million a year earlier.
Snap admitted that the negative impact on business from tightened iPhone data protection and delivery bottlenecks should continue into the fourth quarter. With advertising for the Christmas business, this quarter is usually the best-selling for social media companies. Snap targets fourth quarter revenue of $ 1.16 billion to $ 1.2 billion.
In the past quarter, the company based in Santa Monica, California, was still in the red, but was able to significantly reduce its losses: The bottom line was a loss of 72 million dollars, in the same period last year it was just under 200 million dollars.
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