Snap (NYSE:SNAP)
On Friday, shares of Snap (NYSE:SNAP) plunged as high as 32.1%. Snap stock was down 31.4% at 11 a.m. ET.
The social network company’s precipitous decline may be traced to dismal financial performance brought on by a downturn in its ad tech division.
Then What?
The parent company of Snapchat posted $1.1 billion in sales for the third quarter, up 6% year over year, and a net loss of $360 million, down 400% year over year. This led to a loss of $0.22 per share, much higher than the loss of $0.05 per share recorded in the same quarter a year ago. It was also the weakest quarterly increase in revenue in the company’s history.
$1.1 billion in revenue and $0.24 per share in loss was lower than expected by experts.
Although the company’s results were mixed, management highlighted the positive by highlighting the 19% year-over-year increase in DAUs to 363 million. The average revenue per user (ARPU) fell from $3.11 to $3.03, a drop of 11%.
In addition, Snap said that its board of directors approved a buyback program with the potential to repurchase up to $500 million in Snap stock during the next 12 months.
CEO Evan Spiegel says, “continually expanding our long-term opportunities as we manage this uncertain financial climate.”
So What Happens Now?
The business did not provide financial forecasts for the next quarter, adding to investor anxiety by citing “uncertainties relating to the operational environment.”
Analysts rushed to update their models in light of the findings to account for the worsening scenario. Three of Wall Street’s top analysts have given downgrades. More than a dozen have reduced their price targets in response to the deluge of revisions to their forecasts.
Even though He overestimated Apple’s capacity to weather the macro challenges and Snap’s resiliency (AAPL) privacy changes, which had MKM Partners analyst Rohit Kulkarni seemed to highlight the general fears that this made it more difficult for applications to efficiently target advertising. when he called the results “disappointing.”
Snap stock investors would be wise to wait until there is proof Snap can make a turnaround before committing to the stock, given the economic uncertainties and the industry-specific hurdles the business has yet to traverse.
Meta Description
With a “snap” of a finger, the worth of the Snap stock dropped by about a third.
Featured Image – Megapixl © Piter2121
Author Shariq Khan 
