Snap was riding high last year, enjoying an earnings multiple that many analysts viewed as unsustainable, but others saw as a signal of high expectations for the company relative to its competitors. How did Snap manage to spook investors so severely? As we reported yesterday, the company not only missed revenue forecasts but declined to give guidance on future quarters due to “uncertainties related to the operating environment.” The stock has dropped nearly 90% from its all-time high of $83.34 in September of last year, erasing tens of billions in market cap value and falling harder than embattled, volatile cryptocurrencies like Bitcoin. The stock price is down nearly 40% for the day, at the time of writing, as investors rejigger their expectations for the future performance of the stock.Īfter closing just below $16.50 yesterday, their stock is now hovering below $10.
That said, we view SNAP as a paper airplane in a windstorm and is not a phenomenal barometer for the pace of the digital ad slowdown for platforms like Facebook/Meta, Google, and other digital ad players.Investors in social media company Snap are reeling this afternoon as the stock has endured a bit of a meltdown following its release of Q2 earnings yesterday. “In a shaky macro there will be many casualties as a slower spending environment is on the horizon with darker storm clouds. The missed earnings drove Wedbush Securities analyst Dan Ives to deem the quarter “another train wreck,” which highlights a digital ad slowdown, Apple iOS privacy headwinds and TikTok competition further heating up, according to a note sent to GOBankingRates: Live Richer Podcast: First-Time Homebuying During Inflation: Is It Worth It?ĭiscover: Which Stocks Are the Best To Invest in During Inflation? Snap also said that it intends to “substantially” slow its rate of hiring, as well as the rate of operating expense growth and reprioritize its investments. Experts we’ve spoken with have told us that Snap’s focus and reliance on larger brand advertisers have made it more vulnerable to related budget cut-backs.” “Times are tough for Snap and it remains to be seen if competitors and peers are seeing similar things. In the first quarter they surged 38%,” Kessler said in a note sent to GOBankingRates. This indicates not only challenges in terms of demand, but also in forecasting demand. “Snap’s second-quarter results were disappointing, in large part because they missed expectations even after negatively pre-announcing. Scott Kessler, Global Sector Lead for Technology Media and Telecommunications at Third Bridge, said that not providing guidance was also of significance, as it makes sense for Snap to be overly conservative, especially given investor sentiment around the company. The company also said that it won’t provide financial guidance for the third quarter, as “forward-looking visibility remains incredibly challenging, and it is unclear how the headwinds we observed in Q2 will evolve as we move through Q3,” according to the shareholders’ letter. “While the growth trajectory for ad spend across the social media space has come to a halt, we believe SNAP remains better positioned than most to monetize the platform long term given healthy user engagement levels, an attractive installed base/young audience, and efforts in AR,” Zino wrote. The stock is down 64.9% year-to-date.įollowing the earnings release, CFRA Research said it maintained a Hold opinion on the stock and reduced the 12-month price target on the shares to $15 from $18.Īngelo Zino, senior equity analyst at CFRA Research, wrote in a note sent to GOBankingRates that “we are growing more concerned about business prospects given macro issues and rising competitive pressures, which is hurting advertiser budgets and creating lower bids per action.”
Snap shares closed up 5% on July 21, but tumbled more than 26% in after-hours trading on the results, according to The Wall Street Journal. “We are evolving our business and strategy to reaccelerate revenue growth, including innovating on our products, investing heavily in our direct response advertising business, and cultivating new sources of revenue to help diversify our topline growth.” “While the continued growth of our community increases the long-term opportunity for our business, our financial results for Q2 do not reflect our ambition,” Evan Spiegel, Snap CEO, said in the earnings release. Looking To Diversify in a Bear Market? Consider These 6 Alternative Investments
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Learn: How To Invest Like a Millionaire During a Bear Market Snap shares were down 38.89% on July 22, following disappointing second-quarter earnings – a quarter which “proved more challenging than we expected,” according to a July 21 letter to investors.
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