Snap shares plunged more than 25% in extended trading after the social media company posted disappointing second-quarter results and revealed plans to slow hiring as it struggles with weak revenue growth.
Co-founders Evan Spiegel (CEO) and Bobby Murphy (CTO) have agreed new employment contracts that will keep their jobs until at least January 2027.
Snap recorded a loss of 2 cents per share during the quarter, making it worse than analysts’ estimates, which does not exceed a loss of 1 cent per share, and the social networking platform collected revenues of $1.11 billion, also failing to reach expectations of $1.14 billion, as for the number of daily active subscribers around the world, it reached 347 million users, exceeding expectations of only 344.2 million users.
Snap said in its statement that it will not present any outlook for the third quarter given that its outlook for the future remains fraught with difficulties, and it noted that its revenues during the current quarter are still “almost stable” compared to last year, knowing that analysts expect sales to grow by 18% during the third quarter.
Although forecasts were trimmed, this did not help Snap perform relatively well. Revenue grew during the second quarter by 13% compared to last year, while analysts were looking for a growth of 16%, and Snap justified these weak results by slowing demand for its online advertising platform services. Moreover, factors such as the difficult economic situation, Apple’s development of iOS in 2021 and the fierce competition from TikTok and other applications, have reduced the spending of advertisers and marketers. Read more [Snap Announces Its Snapchat+ Subscriptions Plan].
Snap unveiled a $500 million share buyback program, and it is worth noting that the company’s market capitalization peaked last September at $136 billion, but today it is estimated at only $20 billion. Read more [The Giant Snap Stock Crashes on Worst Day Ever].