Shares in Snap Inc., the parent of Snapchat beset by a confluence of adverse market forces, fell again in after-hours trading after its latest quarterly financial report.
Revenue came in at $1.3 billion, slightly below Wall Street analysts’ consensus forecast for $1.31 billion and flat with the 2021 quarter, while operating losses widened significantly. In the period ending December 31, losses totaled $287.6 million, compared with a $25.1 million loss a year ago. Earnings per share of 14 cents beat analysts’ outlook for 11 cents, but on an adjusted basis they added up to a loss of 18 cents, a big swing from 22 cents of profit per share in the year-earlier quarter.
Daily active user levels for Snapchat matched the Street’s expectation, rising to 375 million from 363 million in the third quarter. Growth in the current first quarter of 2023 will slow, putting the total at 382 million to 384 million, the company projected. “We anticipate that the operating environment will remain challenging, as we expect the headwinds we have faced over the past year to persist throughout Q1,” the company said in its quarterly letter to investors.
Shares in Snap, which had gained ground in the home stretch of the regular trading day to finish up 4%, dropped more than 13% after the earnings release. Aside from a prolonged runup in 2020 and early 2021, the stock has largely remained well below its initial public offering price in February 2017.
The latest report follows a disastrous set of quarterly numbers in the third quarter, whose release last October sent shares in Snap plummeting almost 30%. Those figures reflected softness in the broader advertising marketplace, ringing alarm bells for a number of tech and media players with ad exposure. While all tech companies were put through the wringer in 2022 and established social players have taken licks from surging TikTok, Snap felt more pain than most as its shares fell more than 80%.
Last summer, the company laid off 20% of its workforce (about 1,300 staffers) and abandoned projects like drone camera Pixy and original short-form programming. The latter had previously been a significant part of the company’s pitch to advertisers.
Snap has scheduled an investor day for Feb. 16 at its offices in Santa Monica, CA. The company said it is on target to achieve the $500 million in cost savings it projected last year, though the current quarter will see the final stages of wound-down operations related to those reductions.
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