Snap stock fell on Friday, following its second-quarter earnings report that missed estimates on both the top and bottom lines as a weak advertising market hurt performance.
Snap (SNAP) late Thursday reported an adjusted loss of 2 cents a share on revenue of $1.11 billion. Analysts had expected a loss of 1 percent per share on revenue of $1.14 billion.
The Snapchat parent also declined to provide third-quarter guidance. In addition, he said, it would “significantly reduce our hiring rate and operating expense growth rate.”
SNAP stock fell 39.1 to close at 9.96 Stock market today.
Demand for Snap’s ad platform is declining
“While the continued growth of our community increases the long-term opportunity for our business, our financial results for Q2 did not reflect our ambition,” Chief Executive Evan Spiegel said in a written Snap earnings release.
Spiegel attributed the disappointing results to lower demand for its online advertising platform.
“We are developing our business and strategies to re-accelerate revenue growth, including innovating our products, investing heavily in our direct response advertising business and developing new revenue streams to help diversify our top-line growth,” he said.
Snap Earnings News drags down peers
Snap and other social media companies get 97% of their revenue from advertising, which has declined over the past year.
Signs of advertising weakness emerged when Snap reported First quarter results On April 21. That report came with a caveat, while showing a slight error in the top and bottom lines.
Challenges Besetting Snap Stock
Advertisers across a wide variety of industry groups have reported concerns regarding the macro operating environment. Those concerns include persistent supply chain disruptions, rising input costs, economic worries from rising interest rates and geopolitical risks from the war in Ukraine.
That is another big problem Apple (AAPL) replaced ad tracking in its operating system. Consumers gained more privacy, but advertisers lost valuable user tracking data. The shift has cost social media stocks billions in lost revenue.
“SNAP’s perception of forward-looking advertiser demand will be key amid geopolitical conflicts, supply chain and inflation-driven headwinds,” Cowen analyst John Blackledge said in a note to clients ahead of Snap’s earnings report.
Follow Brian Deacon on Twitter @IBD_BDeagon Learn more about technology stocks, analytics and financial markets.
You may also like:
“Total coffee maven. Extreme web geek. Award-winning explorer. Travel aficionado.”