Tuna Cetin
Social media platform Snap’s shares dropped by more than 30% on Friday to the pre-pandemic levels after the company reported its Q3 results on Thursday and said it expects zero revenue growth in the next quarter.
Snap reported a revenue of $1.13 billion for the third quarter ended September 30, which grew 6% year-over-year, however, missed analysts’ expectations of $1.14 billion. The number of its daily active users, on the other hand, grew by 19% Y/Y to 363 million.
Also Read: Snapchat Revenue and Usage Statistics
“Our revenue growth continued to decelerate in Q3 and continues to be impacted by a number of factors we have noted throughout the past year, including platform policy changes, macroeconomic headwinds, and increased competition,” the company wrote in its investor letter. “We are finding that our advertising partners across many industries are decreasing their marketing budgets, especially in the face of operating environment headwinds, inflation-driven cost pressures, and rising costs of capital.”
‘’Forward looking revenue visibility remains incredibly challenging, and this is compounded by the fact that revenue in Q4 is typically disproportionately generated in the back half of the quarter, which further reduces our visibility,’’ the company said, adding that it won’t provide any financial guidance for the fourth quarter, but that it expects its yearly Y/Y revenue growth to be ‘’approximately flat’’.
Meanwhile, the news also led to a decline in the stock price of other businesses whose ad business accounts for a sizable portion of their revenue. As reported by Reuters, Facebook’s parent Meta and Pinterest saw a drop of %2 – %7, and Twitter shares fell around 3% which was also possibly impacted by reports that the Biden administration could launch security review into Musk’s ventures, including his $44 billion acquisition of Twitter.
Also Read: Judge halts Musk vs. Twitter trial to give time to close the deal
Largely due to Apple’s App Tracking Transparency feature, global economic headwinds and the rising competition, the revenue of digital advertising companies has decreased by nearly $1 trillion so far this year. Shares of Snap have decreased by 77%. Alphabet’s stock has lost more than 30% of its value, Pinterest’s price has tumbled nearly 40%, and Meta’s shares have fallen 60%. Meanwhile, Twitter’s stock has grown by 21% thanks to the acquisition news.
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