The owner of Snapchat is Damaged as Shares of the company that owns the social media platform Snapchat have fallen precipitously after it missed revenue projections and issued a warning about “incredibly challenging” circumstances.
According to the company, marketers reduced their expenditure due to supply chain problems.
In New York after-hours trading, Snap shares fell by more than 25%.
On worries about economic headwinds, shares of technological behemoths like Facebook owner Meta and Google’s parent firm Alphabet also declined.
Snap announced sales of $1.11 billion (£926 million) for the three months ending in June after US markets closed on Thursday. This figure fell short of Wall Street projections.
The business said that several of its advertisers had reduced their expenditure due to growing expenses, supply chain problems, and labor constraints.
The company said that economic difficulties, changes to iPhone privacy settings, and fiercer competition for advertising have “significantly hampered” its revenue growth.
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By the end of June, though, Snapchat had 347 million daily active users, exceeding expectations.
It said that going forward, it wants to hire fewer people, expand its advertising business, and create new income streams.
Shares of significant technology companies that also sell online advertisements, such as Meta, Alphabet, Twitter, and Pinterest, fell in after-hours trading following the results.
Snap’s earnings beat those of bigger competitors like Twitter, which will report figures later on Friday. Alphabet will release its most recent update on Tuesday, and Meta will do the same on Wednesday.
Typically, Snap releases its financial results before Twitter, Meta, and Google.
They thereby provide a glimpse into the whole sector’s health.
There is an issue if Snap’s quarterly results are any indication.
Social media businesses operate on a relatively straightforward basis. They generate money by selling advertisements even if the product is free.
However, advertisers aren’t swarming to Snapchat. In fact, they definitely exude anxiety.
When individuals aren’t spending as much as they once did, the economy is often in trouble.
But there are also other elements at work.
Apple adopted standards that allow customers to reject personalized adverts last year.
That has been disastrous for businesses like Snap, which for years have demanded exorbitant fees from marketers for the right to target their consumers.
Additionally, the older generation of social media firms is suffering as a result of TikTok’s remarkable popularity since they are losing users to the Chinese-owned site.
