Snap shares plummet as quarterly results raise concerns

break off (SNAP) shares plummeted to their lowest level in more than three years on Friday as the social media company’s third-quarter results sounded alarm bells for analysts.


“Our revenue growth continued to decelerate in the third quarter and continues to be impacted by many of the factors we have noted over the past year, including platform policy changes, macroeconomic headwinds and increased competition,” Snap said in a letter to shareholders .

Late Thursday, the parent company of Snapchat’s multimedia messaging app reported an adjusted loss of 8 cents a share on revenue of $1.13 billion. Analysts expect Snap to report a loss of 24 cents on revenue of $1.14 billion.

Snap stock tumbled 32% to 7.33 in early stock trading today before rebounding slightly.

Revenue rose 6% year over year in the third quarter. In a note to clients ahead of the earnings report, Jefferies analyst Brent Thill said revenue growth of less than 8% could lead investors to believe the fundamentals are not improving.

Snap said it ended the quarter with 363 million daily active users. Thill said that less than 360 million daily active users could raise questions about engagement.

Snap Stock: Three strategic priorities

Snap CEO Evan Spiegel said in a written statement.

In August, Snap said it would lay off 20% of the company’s roughly 6,000 employees. In addition, it is part of a major restructuring plan.

Like other social media companies, Snap is struggling. Amid an uncertain economic outlook, the digital advertising business is deteriorating.This includes being hindered appleof recent privacy changes. Additionally, Snapchat is seeing increasing competition from TikTok.

“Snap has struggled for the past few quarters and the market is casting a vote of no confidence,” Monness Crespi Hardt analyst Brian White said in a note to clients.

The competitive landscape remains fierce

“The competitive landscape remains fierce, and we believe the darkest days of this recession have come,” White added.

RBC analyst Brad Erickson lowered his price target on Snap stock to 8 from 11.

“Snap’s continued challenges in forecasting revenue, a concentrated advertiser base and significant exposure to lower ad budgets have left us on the edge,” Erickson wrote in a note to clients. “We need to see more Evidence of sustained ad spend and further content differentiation can only become more constructive.”

In addition to Snap stock fall, Facebook parent company meta platform (META) shares fell more than 4% in early trade Friday, near 126 points.

Follow Brian Deagon on Twitter @IBD_BDeagon Learn more about tech stocks, analytics and financial markets.

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