Snap shares plummeted greater than 25% in prolonged trading on Thursday after the social media company reported disappointing second-quarter results and said it plans to slow hiring because it reckons with weakening revenue growth.
Co-founders Evan Spiegel, the CEO, and technology chief Bobby Murphy agreed to latest employment contracts that may keep them of their jobs through at the very least January 2027.
Here’s how the corporate did:
- Earnings per share: A lack of 2 cents, adjusted, versus expected lack of 1 cent, in accordance with a Refinitiv survey of analysts
- Revenue: $1.11 billion versus $1.14 billion expected, in accordance with Refinitiv
- Global Day by day Lively Users (DAUs): 347 million versus 344.2 million expected, in accordance with StreetAccount
In its investor letter, Snap said it is not providing guidance for the third quarter because “forward-looking visibility stays incredibly difficult.” The corporate said that revenue up to now within the period is “roughly flat” from a 12 months earlier. Analysts were expecting sales growth of 18% for the third quarter, in accordance with Refinitiv.
“We usually are not satisfied with the outcomes we’re delivering, whatever the current headwinds,” the corporate said within the letter.
It’s the most recent chapter in a tricky 12 months for Snap, whose stock has lost almost two-thirds of its value in 2022. In May, Snap said it would not meet the second-quarter guidance it set the prior month, resulting in a 43% plunge within the share price. On the time, Snap cited a macroeconomic environment that was deteriorating much faster than expected.
Zoom In IconArrows pointing outwards
Even with the reduced guidance, Snap still missed estimates. Revenue increased 13% from a 12 months ago, while analysts were expecting growth of 16%.
“The second quarter of 2022 proved more difficult than we expected,” Snap said within the investor letter. The corporate said it now plans to “substantially slow our rate of hiring, in addition to the speed of operating expense growth.”
Snap attributed its disappointing results to slowing demand for its online ad platform. Moreover, a difficult economy, Apple’s 2021 iOS update and increased competition from corporations like TikTok have led marketers to tug back on their spending.
Snap said that even some relatively healthy businesses were curbing their commitments due to “input cost pressure as a result of inflation.”
“In certain high-growth sectors, businesses are reassessing investment levels amid the rising cost of capital, which is further reflected in campaign budgets and the extent of bids per motion,” Snap said.
Snap also announced a stock repurchasing program of as much as $500 million. And for his or her latest employment contracts, Spiegel and Murphy will receive an annual salary of $1 and no equity compensation.
Earlier this week, Snap debuted Snapchat for Web, a desktop version of the mobile Snapchat app that individuals can use to send messages and make video calls with their Snap contacts.
Snap revealed latest desktop app shortly after it debuted its Snapchat+ paid subscription plan, which costs $3.99 a month and lets people access early features and see who has viewed their Snaps.
Investors will soon get a clearer picture of the web ad environment. Twitter is about to report results Friday morning, followed by Alphabet and Meta next week.
Meta and Pinterest shares fell 5% in after-hours trading on Thursday while Alphabet shares declined 2.9% and Twitter dropped 1.5%.
Snap’s market cap peaked at $136 billion in September. Based on after-hours pricing, the corporate is now value $20 billion.
WATCH: Augmented reality is very important to the expansion of our business, Spiegel says