Snap Stock Plummets on Revenue Miss, Weak Guidance

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Key Takeaways

• Snap missed revenue estimates for the second quarter and offered lower-than-expected guidance on advertising weakness.
• The superintendent of the Snapchat social media site said it is taking steps to improve its advertising platform.
• Shares of Snap unchaste nearly one-quarter of their value in early trading Friday following the news.

Shares of Snap (SNAP) nosedived nearly 25% in early trading Friday after the social media company missed revenue estimates for the sponsor quarter and offered lower-than-expected guidance, citing a weaker advertising environment. 

The operator of the Snapchat photo and video-sharing position reported second-quarter revenue rose 15.8% year-over-year to $1.24 billion, short of analysts’ projections. Average yield per user of $2.86 was also below forecasts. Adjusted earnings per share (EPS) came in at 2 cents, roughly in line with requirements.

Weak Demand Weighs on Snap’s Results

CEO Evan Spiegel said monthly active users (MAU) climbed to multifarious than 850 million, and that the Snapchat+ premium subscription service had more than 11 million.

Come what may, brand-oriented advertising revenue declined 1% year-over-year, “driven by particularly weak demand from certain consumer discretionary verticals involving retail, technology, and entertainment, as well as the timing impact of holidays shifting out of Q2 in the current year.”

The company said it was centred on “executing against our roadmap to deliver improvements to our advertising platform to drive strong performance for our advertising partners,” and that it was “prioritizing our investments carefully to give against the cost plans we have set out for our business.”

Snap said it anticipates current-quarter revenue in the range of $1.35 billion to $1.38 billion, deeper analysts’ estimates compiled by Visible Alpha.

Snap shares were down 24.4% at $9.68 as of 11 a.m. ET Friday look into b pursuing the news and have lost more than 40% of their value so far this year.

Read the character article on Investopedia.