Snap Inc. Stocks Plummet After Revenue Miss and Job Cuts

Snap Inc.'s stock experienced a sharp decline of over 30% in extended trading on Tuesday. This comes as the social media company reported a revenue miss and provided weak guidance for the future. The disappointing results were announced just one day after Snap revealed further deep job cuts.

In comparison, Facebook parent company Meta Platforms Inc. and Google parent company Alphabet Inc. saw unexpectedly strong digital ad sales, highlighting the challenging environment Snap is currently facing.

Snap recorded a net loss of $248.2 million, or 15 cents per share, in the latest quarter. This is a significant contrast to the net income of $288.5 million, or 18 cents per share, reported in the same period last year. However, adjusted earnings per share stood at 8 cents.

Although Snap's revenue improved from $1.3 billion to $1.36 billion year-over-year, it fell slightly below analysts' expectations. According to FactSet, analysts were anticipating adjusted earnings of 6 cents per share on revenue of $1.38 billion.

In a letter to investors, Snap acknowledged that the conflict in the Middle East affected their year-over-year growth by approximately 2 percentage points in Q4. Despite this setback, the company expressed optimism about its advertising platform and the positive results it has delivered for many advertising partners.

For the first quarter of the new year, Snap provided a revenue range of $1.095 billion to $1.135 billion. Analysts surveyed by FactSet have an average expectation of $1.12 billion in revenue for this period.

Snap's decision to reduce its workforce by about 10% aligns with its strategy to prioritize key business goals and maintain the flexibility to invest in future growth opportunities. In August 2022, the company had already announced a 20% reduction in staff.

On a positive note, Snap reported a 10% increase in daily active users, reaching a total of 414 million.

Despite the recent setback, shares of Snap have still managed to surge by 43% over the past 12 months. In comparison, the broader S&P 500 index has shown a growth of 19%.