Snap Inc. (NYSE: SNAP) shares plunged over 30% in after-hours trading on Tuesday following the release of its fourth-quarter earnings report, which revealed sales figures falling short of analysts’ expectations and a bleak forecast for the next quarter.
Snap, the parent company of Snapchat, reported lower-than-expected revenue for the quarter on Tuesday, signaling ongoing challenges in competing against industry giants such as Meta Platforms (NASDAQ: META) and Alphabet (NASDAQ: GOOG) for digital advertising revenue.
Tech giants like Meta Platforms and Alphabet, owners of Facebook and Google, respectively, garner advertiser attention due to their vast data resources for targeted ads. Both have downsized in the past year to trim expenses. On the same note, Snap revealed plans to lay off 528 employees, constituting 10% of its staff, on Monday. This strategic move aims to reallocate resources towards sustained growth initiatives.
The company, known for its flagship platform Snapchat, posted revenue of $1.36 billion for the fourth quarter ended December 31, slightly below the consensus analyst estimate of $1.38 billion.
Snap expects revenue to range between $1.1 billion and $1.14 billion in the first quarter, marginally lower than analysts’ forecasts.
In a shareholder letter, Snap conveyed its intention to prioritize Snapchat’s user base expansion and allocate increased resources toward lucrative markets where the company garners significant revenue, notably North America and Europe.
Snapchat’s daily active users reached 414 million in the fourth quarter, beating analyst estimates of 411.6 million. The company aims for further growth, targeting 420 million daily users in Q1.
Snap Inc. (NYSE: SNAP) Stock Reaction
SNAP stock plummeted 32.67% in the extended trading after gaining 4.18% in the regular trading hours on Tuesday. The traders had exchanged hands with 82,135,142 (82.13 million) shares compared to the average daily trading volume of 23.51 million.
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