Snap shares plummeted by more than 25% on Thursday’s extended deal after social media companies reported disappointing second-quarter results and said they plan to cut hiring due to slower earnings growth.
Co-founder Evan Spiegel, CEO and CTO Bobby Murphy has agreed to a new employment contract that will continue their work until at least January 2027.
Here’s how the company did it:
- Profit per share: According to analyst Refinitiv research, adjusted loss of 2 cents against expected loss of 1 cent
- Revenue: $ 1.11 billion compared to the expected $ 1.14 billion, according to Refinitiv
- Global Daily Active User (DAU): According to StreetAccount, 347 million compared to the expected 344.2 million
Snap said in a letter to investors that it did not provide guidance for the third quarter because “the outlook remains very difficult.” According to the company, sales over the past period have been “almost flat” with the previous year. According to Refinitiv, analysts expected third-quarter sales to increase by 18%.
“Despite the current hurdles, I’m not happy with the results I’ve achieved,” the company said in a letter.
This is the latest chapter of a tough year for Snap, whose stock price was lost by nearly two-thirds in 2022. In May, Snap announced that it had missed the second quarter guidance set last month and would fall 43%. .. At the stock price. At that time, Snap was talking about a macroeconomic environment that was deteriorating much faster than expected.
Snap was still below the estimate, even with reduced targeting. Revenues increased 13% year-on-year, while analysts expected growth of 16%.
“The second quarter of 2022 proved to be more difficult than expected,” Snap said in a letter to investors. The company now said it plans to “significantly reduce hiring and operating expense growth.”
Snap attributed the disappointing result to slowing demand for online advertising platforms. In addition, difficult economic conditions, Apple’s iOS 2021 update, and fierce competition with companies such as TikTok have helped marketers cut spending.
Even relatively healthy companies are stepping up their commitments because of “pressure on input costs from inflation,” Snap said.
“In some high-growth industries, companies are reassessing their investment levels amid rising cost of capital, which is also reflected in their campaign budget and bid levels per share,” said Snap. I am.
Snap also announced a share buyback program of up to $ 500 million. And under their new employment contract, Spiegel and Murphy receive an annual salary of $ 1 and no stock compensation.
Earlier this week, Snap announced Snapchat for web. This is the desktop version of the Snapchat mobile app that you can use to exchange messages and make video calls with your Snap contacts.
Snap announced a new desktop app shortly after launching its paid Snapchat + subscription plan. That’s $ 3.99 a month, and users can access early features to see who has viewed Snap.
Investors will soon have a clearer picture of the online advertising environment. Twitter will announce the results on Friday morning, followed by Alphabet and Meta next week.
In Thursday’s overtime trading, Meta and Pinterest’s share fell 5%, while Alphabet’s share fell 2.9% and Twitter fell 1.5%.
Snap’s market capitalization peaked at $ 136 billion in September. Based on off-hours prices, the company is currently worth $ 20 billion.
clock: Augmented reality is important to the growth of our business, says Spiegel.