Snap Reports Gloomy Earnings, Forecasts Revenue Drop of 10%

The Associated Press
The Associated Press

Snap, the parent company of the popular Snapchat social media app, recently reported disappointing fourth-quarter earnings due to ongoing issues with digital ads. The company also forecasted a drop in revenue of up to 10 percent for the upcoming quarter.

CNBC reports that social media giant Snap reported its fourth-quarter earnings on Tuesday, but they fell short of analyst expectations, causing its shares to crater more than 13.5 percent in morning trading. For the third consecutive quarter, Snap has let its investors down. The company’s adjusted earnings per share of 14 cents beat the consensus estimate of 11 cents, but its revenue of $1.30 billion fell short of analysts’ expectations of $1.31 billion.

WASHINGTON, DC - APRIL 10: Facebook co-founder, Chairman and CEO Mark Zuckerberg testifies before a combined Senate Judiciary and Commerce committee hearing in the Hart Senate Office Building on Capitol Hill April 10, 2018 in Washington, DC. Zuckerberg, 33, was called to testify after it was reported that 87 million Facebook users had their personal information harvested by Cambridge Analytica, a British political consulting firm linked to the Trump campaign. (Photo by Alex Wong/Getty Images)

Facebook co-founder, Chairman and CEO Mark Zuckerberg (Photo by Alex Wong/Getty Images)

Snap acknowledged the difficult year in a letter to investors, claiming it was challenged by macroeconomic headwinds, platform policy changes, and increased competition. Sales for the entire year increased by 12 percent to $4.6 billion in 2022, but the social media company declined to provide guidance for a third consecutive quarter.

Snap claims its “internal forecast” assumes a sales decline of between two percent and 10 percent from a year earlier. The business stated that it anticipates the year’s first quarter to continue to be difficult for monetization.

In addition to developing augmented reality technologies, Snap is currently concentrating on expanding its user base and increasing engagement. The business announced that more than two million people are now paying subscribers to its Snapchat+ service. Brands can easily launch campaigns on Snap’s online ad platform because of its simplicity, but those same brands can also easily pause campaigns, which has a negative impact on the company’s financial situation.

In addition to announcing last year that 20 percent of its over 6,000-person workforce would be laid off, Snap also put several projects on hold, including its photo-taking drone and Snap Originals premium series.

The fourth quarter earnings season for ad-supported internet companies got off to a disappointing start for Snap with its earnings report. Other companies like Facebook and Google parent Alphabet will be reporting their earnings later this week. Snap and other companies that spin user data into ad profits have been severely hindered by Apple’s privacy changes.

Read more at CNBC here.

Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan


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