Snap shares slide on weak guidance
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The news: Snap has forecast quarterly results below expectations as it grapples with stiff competition from larger rivals for advertising dollars in an uncertain economy, sending its shares tumbling.
The numbers: The Snapchat owner reported a 16% lift in June quarter revenue to USD1.24 billion ($1.91 billion), missing analyst estimates, while net loss narrowed to USD249 million.
Snap forecast a third-quarter revenue range with a midpoint of USD1.355 billion, below Wall Street estimates of USD1.36 billion and expects adjusted earnings between USD70 million and USD100 million, below expectations of USD110.8 million.
That sent its shares down more than 17% in extended trading in New York.
The context: However, daily active users (DAU) of Snapchat grew to 432 million at the end of June, beating estimates of 431.2 million. The California-based company expects this to reach 441 million in the third quarter.
Snap's revenue growth has come under pressure over the past few quarters as high interest rates prompt enterprise clients in certain sectors to tighten their marketing budgets. Its biggest competitors — Facebook and Instagram parent Meta and Bytedance’s TikTok — far outrank it in terms of scale and established advertiser relationships.
Snap has been investing heavily in its augmented reality platform, providing advertisers with branded AI-generated filters and lenses to attract audiences.
