The owner of Snapchat narrowly missed Wall Street’s expectations as it continues to grapple with a slowdown in digital advertising. Shares in the social media company tumbled by nearly a third.
While Snap said it was “encouraged by the progress we are making”, it cited factors including the conflict in the Middle East, which knocked its business.
Snap’s sales rose 5% to $1.36bn in the three months to 31 December, falling short of the $1.38bn expected by analysts. Net losses narrowed from $288m to $248m.
Investors remained concerned about its growth. The company forecast revenue between $1.1bn and $1.14bn in the current quarter; analysts had expected about $1.1bn.
Snap’s stock dropped 30% to $12.21 during out-of-hours trading in New York.
The world’s two biggest advertisers – Alphabet, owner of Google and YouTube, and Meta Platforms, owner of Facebook and Instagram – have been faring better. Smaller players in the market continue to struggle.
Snap, based in Santa Monica, California, finished 2023 with some 414 million daily active users, and expects this figure to rise to 420 million during the first quarter.
The group is shifting “more of our focus toward user growth and deepening engagement in our most highly monetizable geographies, including North America and Europe”, it told investors on Tuesday.
Evan Spiegel, CEO of Snap, said: “2023 was a pivotal year for Snap, as we transformed our advertising business and continued to expand our global community, reaching 414 million daily active users. It has 7 million subscribers who pay for its Snapchat+ premium product.
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“Snapchat enhances relationships with friends, family, and the world, and this unique value proposition has provided a strong foundation to build our business for long-term growth.”
It released its earnings a day after announcing it would lay off approximately 10% of its global workforce, or about 530 employees, as part of a reorganization to “reduce hierarchy and promote in-person collaboration”. The company recalled its Pixy selfie drone last week due to the fire risk of an overheating battery.
