The social network has presented disappointing figures.
(Photo: dpa)
new York Current figures on the business of the photo app Snapchat are driving investors to flee. The stock slumped by around a quarter in an initial reaction after operating company Snap reported its slowest sales growth to date and a significantly higher loss for the past quarter. On Thursday, Snap referred to “significant headwinds” for the business, among other things because advertisers cut marketing budgets due to economic concerns.
Snap’s revenue increased 6% year over year last quarter to $1.1 billion. In the first quarter of this year, the growth rate was 38 percent, before that 50 or 60 percent was also common. The quarterly loss widened to $359.5 million from nearly $72.0 million a year earlier.
Meanwhile, the number of daily active users grew from 347 to 363 million within three months.
Snap also points to increased competition for online ad spend with other services like Tiktok. Also, Snapchat is still struggling with Apple’s measures to better protect privacy on the iPhone. App operators must explicitly ask users for permission if they want to track their behavior across different applications. Many users rejected this – and that torpedoed numerous business models in online advertising.
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“Snapchat is going through its most difficult phase yet,” said Jasmine Enberg, principal analyst at Insider Intelligence. On the one hand, the “disappointing results” are the result of short-term challenges such as the weakening economy.
Important sign for the tech world
On the other hand, the numbers “also reflected Snap’s longer-term challenge of being a smaller player in the digital advertising market – and a platform that many advertisers still don’t fully understand,” Enberg said. User growth, while strong, is coming mostly from outside of North America. However, the company still gets “the majority of its revenue” from its core US market.
Snap’s numbers are also being closely tracked on Wall Street because they’re seen as the start of the quarterly season for US tech giants, which are due to report next week. As in the summer, the focus is again on the question of how badly the economic downturn and the strong dollar are affecting Google, Meta, Microsoft and Apple.
The Snap share price fell in after-hours trading by a good 25 percent to around eight dollars. At the beginning of the year, the paper was still above the $40 mark.
With material from dpa.
More: Sentiment reversal in tech stocks: new sell-off looms.