Snap’s missed revenue target takes bite out of share price
Snap missed Wall Street estimates for quarterly revenue last night, as the Snapchat owner struggled to compete against larger rivals for digital advertising revenue, sending its shares sharply lower.
The photo-messaging app, which faces stiff competition from much larger rivals such as Facebook-owner Meta Platforms and Alphabet, the owner of Google, reported revenue in the fourth quarter to the end of December was $1.36 billion compared with forecasts of $1.38 billion.
In late trading on Wall Street, shares in Snap were down $5.03, or 29 per cent, at $12.46, valuing the company at about $29 billion.
Snap, which was founded in 2011, forecast first quarter revenue between $1.1 billion to $1.14 billion. Analysts were expecting $1.1 billion.
On Monday, Snap announced it would lay off 10 per cent of its staff, or 528 employees, in order to “invest incrementally” in the company’s growth over time. The company expects pre-tax charges in the range of $55 million to $75 million, primarily consisting of severance and related costs, and other charges, of which $45 million to $55 million are expected to be future cash expenditures.
In a letter to shareholders, Snap said it would shift more of its focus this year to growing Snapchat’s user base and investing in markets where the technology company earns the most money, including North America and Europe.
Daily active users totalled 414 million in the fourth quarter, beating analyst estimates of 411.6 million.
The Santa Monica-based company said it expects the number of daily users will grow to 420 million in the first quarter.
