The effects of a weakening economy is being witnessed by Snap Inc that on Thursday that declined to make a forecast in “incredibly challenging” conditions thus by, sending its shares down 25%. This has resulted in setting off a chain reaction of stocks among rivals.
The Snapchat owner said some advertisers continue to face supply-chain disruptions and labor shortages, and many others are contending with rising costs amid record inflation, which has led to cutbacks in spending on advertising, as reported by Reuters.
The California-based company, Santa Monica, said it will notably slow hiring and invest in its business that involves advertising and in order to grow and progress at a faster pace find new sources of revenue.
The companies that sell online ads including Facebook owner Meta Platforms Inc, Google owner Alphabet Inc lost about $80 billion in combined stock market value on Thursday after the results by Snap. It was the first of the major tech firms to report second-quarter earnings. On Friday, the results will be reported by Twitter Inc.
It is expected by investors that this would make the world witness the slowest-ever pace of growth for social media ad revenue considering this year as rising inflation and other economic woes can cause brands to slash their marketing budgets.
Snap’s revenue for the second quarter ended June 30 was $1.11 billion. This missed analyst expectations of $1.14 billion, according to IBES data from Refinitiv. As considering the prior year quarter, the figure grew 13% from that.
Snap said revenue is flat so far in the current third quarter as compared to the prior year. Snap stated in prepared remarks released ahead of a conference call with analysts,”We are not satisfied with the results we are delivering, regardless of the current headwinds.”
Rising daily users It has been seen that daily active users on Snapchat rose 18% year-over-year to 347 million, beating consensus estimates of 344 million users.
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