Snap’s crisis continues to worsen. The company’s shares collapsed on the stock market this Friday after the poor results presented by the social network on Thursday after the market closed. The accounts show the first year-on-year drop in revenue in the history of the company that owns the social network Snapchat. The price has opened with a sharp fall, close to 20%, to $8.41 per share, its lowest since the beginning of 2019. The shares have lost 90% of their value since the highs of September 2021, when in the hangover from the pandemic still seemed like a company with great growth prospects.
Snap reported Thursday that revenue from January to March this year was $989 million (about 900 million euros at current exchange rates), 7% less than in the same period last year. Losses, on the other hand, increased by 9%, up to 329 million dollars. In addition, the adjusted gross operating result volatilized, it went from 64 million dollars in the first quarter of 2022 to less than a million in the first three months of this year.
The company has warned in its quarterly letter to investors that it expects the “continued demand disruption” for advertising, caused by economic pressures and Snap’s own product changes, to continue into the second quarter. “We anticipate that it will take time for some of our advertisers to fully recover and for our models to better suit their new goals,” he says.
The company had already been showing signs that it was going through a bad time. In the 2022 financial year as a whole, losses practically doubled, going from 488 million dollars in 2021 to 1,430 million dollars in 2022. Revenues were stagnant in the fourth quarter of last year, with declines to a large extent of the same.
The company founded and directed by Evan Spiegel has preferred not to publish forecasts for the second quarter and to highlight the increase in the number of users. “Our community continues to grow, reaching 383 million daily active users in the first quarter, and we are working to deepen the relationship with our content platform, while creating innovative new features and services like My AI,” said Spiegel, CEO, through a statement.
“We are working to accelerate our revenue growth and are taking this opportunity to make significant improvements to our advertising platform in order to increase our advertising partners’ return on investment,” he added.
When it went public in 2017, Snap was an exponentially growing company. That growth was losing steam, but it was still maintaining a good pace at the beginning of 2022. Now it has stopped dead and a drop begins that it is difficult to know if it will be temporary or a sign of exhaustion of the network itself.
Snap announced in August a 20% cut in the workforce and the cancellation of some of its projects as part of a broad restructuring plan for the company. The company led the first wave of layoffs from tech companies.
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