As a result of modifications to its advertising platform, Snap Inc.’s quarterly revenue fell short of analyst projections on Thursday. The company also issued a warning that the following quarter’s performance might not meet Wall Street’s expectations.
Snap’s stock fell 19% in after-hours trading.
The Santa Monica, California-based company that owns the photo messaging app Snapchat has a long history of pioneering social media trends that larger competitors have since copied, but it has come under scrutiny from investors over whether it can generate revenue growth from its investments in cutting-edge technology like augmented reality (AR).
As a result of modifications to its advertising platform, Snap Inc.’s quarterly revenue fell short of analyst projections on Thursday. The company also issued a warning that the following quarter’s performance might not meet Wall Street’s expectations.
Snap’s stock fell 19% in after-hours trading.
The Santa Monica, California-based company that owns the photo messaging app Snapchat has a long history of pioneering social media trends that larger competitors have since copied, but it has come under scrutiny from investors over whether it can generate revenue growth from its investments in cutting-edge technology like augmented reality (AR).
The business predicted that it will take some time for its ad systems to adapt to the upgrades and produce better-performing ads.
Revenue for the first quarter ended March 31 was $989 million, falling short of analyst projections of $1.04 billion and down from $1.06 billion in the corresponding time previous year.
The fall in Snap’s revenue “is a signal of deep challenges at the company,” according to Insider Intelligence chief analyst Jasmine Enberg.
“Snapchat users primarily use the app for messaging, and messaging apps are notoriously difficult to monetize,” she claimed.
Snap’s net loss decreased from $360 million the year before to $329 million during the quarter.
Along with investing more in augmented reality, Snap has recently opened up access to its My AI chatbot to all Snapchat users worldwide.
Snap also revealed My AI would be able to reply to user messages with an entirely AI-generated image at an annual conference for content creators, marketers, and other partners last week.
In line with Wall Street predictions, the number of daily active Snapchat users increased 15% year over year to 383 million.
Between 394 million and 395 million daily active users are what Snap anticipates for the second quarter.
Additionally, Pinterest forecasted second-quarter revenue below market forecasts on Thursday, and its shares dropped 8% in after-hours trade.
Following their results on Thursday, Snap and Pinterest’s stock market value fell by more than $4 billion.
The two biggest digital ad platforms in the world, Alphabet and Meta Platforms, on the other hand, released positive first-quarter results this week as businesses capitalized on their broad consumer reach and sophisticated ad capabilities.
Leave a reply