The messaging app Snap Inc. (SNAP stock) issued a warning to investors on Friday that its Christmas quarter will see little to no revenue growth due to a decline in worldwide ad spending, which caused the company’s shares to drop further.
Snap (NYSE:SNAP) said that its revenue for the three months that ended in September was $1.13 billion, which was a 6% increase from the same period the previous year but marked the slowest rate of growth for the firm since it went public in 2017.
Daily active users increased by 19% to 363 million, according to Snap, but total watch time by users in the United States of the Snapchat messaging app decreased by 5% compared to the previous year. This is due to increased competition for screen time from companies such as China-based ByteDance, which is the owner of the popular TikTok app.
Adjusted profits of 8 cents per share beat Wall Street forecasts, but the current quarter outlook sent shares tumbling, and it rippled through the social media space, taking more than $40 billion in market value away from competitors such as Twitter (TWTR), Pinterest (PINS), and Meta Platforms (META).
“While our business continued to face significant headwinds this quarter, we took action to further focus our business on our three strategic priorities of growing our community and deepening their engagement with our products,” Evan Spiegel, CEO of Snapchat, told investors on a conference call late Thursday. “We took action to further focus our business on our three strategic priorities of reaccelerating and diversifying our revenue growth and investing in augmented reality.”
“We believe that we can be successful in this new operating environment, but we must rigorously prioritize our investments and continue to delight our community with our products while driving success for our advertising partners,” he added. “In order for us to be successful, we must continue to drive success for our advertising partners and rigorously prioritize our investments.”
Snap Stock Decline
In pre-market trading, Snap shares were tagged 25.2% down, which indicated an opening bell price of $8.07 per. This move would increase the stock’s year-to-date drop to almost 83% if it were to continue.
JMP Securities analyst Andrew Boone, who carries a’market outperform’ rating with a $10 price target, stated that “while we acknowledge revenue volatility likely continues as Snap is facing increased competition, macro is impacting results, and ahead of a restructuring of the sales force in the first quarter of next year, the company continues to reach 90%+ of 13- to 24-year-olds in 20+ countries and remains one of the few scaled platforms where advertisers can influence young audiences.”
“This as we continue to believe that there is significant value in Snap’s AR platform (though this is likely to be more of a material driver in a few years),” he added, calling the overnight slide in the stock “an opportunity, especially for long-term holders as we believe growth rates can rebound to 20%+ levels as Snap gets to a more stabilized environment across competition, macro, and operations.” “This as we continue to believe that there is significant value in Snap’s AR platform (though this is likely to be
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Author Valerie Remorosa 
