Snapchat owner’s earnings miss predictions, shifts focus to user growth in ‘monetizable’ markets such as North America and Europe.
Snapchat’s owner narrowly falls short of Wall Street’s expectations amidst a slowdown in digital advertising. Shares in the social media firm plunged by almost a third. While Snap expressed being “encouraged by the progress we are making,” it attributed factors like the Middle East conflict impacting its business.
Snap’s revenue increased by 5% to $1.36 billion in the three months ending December 31, falling short of analysts’ expectations of $1.38 billion. Net losses decreased from $288 million to $248 million.
Investor concerns about its growth persisted. The company projected revenue in the current quarter to range between $1.1 billion and $1.14 billion, slightly below analysts’ expectations of about $1.1 billion.
During after-hours trading in New York, Snap’s stock plummeted by 30% to $12.21.
Alphabet, the parent company of Google and YouTube, and Meta Platforms, the parent company of Facebook and Instagram, the world’s two largest advertisers, have been performing better, while smaller market players continue to struggle.
Snap, headquartered in Santa Monica, California, ended 2023 with approximately 414 million daily active users and anticipates this number to increase to 420 million in the first quarter.
The company informed investors on Tuesday that it is shifting “more of our focus toward user growth and deepening engagement in our most highly monetizable geographies, including North America and Europe.”
Evan Spiegel, CEO of Snap, stated, “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.
Snapchat strengthens connections with friends, family, and the wider world, offering a distinctive value proposition that serves as a solid foundation for our long-term business growth.
