Snap Inc.’s stock snapped Thursday after the company disclosed slackening digital advertising and hinted at cost-cutting while declining to provide a financial forecast. Snap’s
results — the first among the major tech companies who rely heavily on digital advertising to report this quarter — likely portend choppy times ahead for Alphabet Inc.’s
Google, Facebook parent company Meta Platforms Inc.
and others in the grip of inflation, a war in Ukraine, supply-chain woes and a potential recession.
For more: Twitter has more to worry about than Elon Musk, as doubts about online-ad industry multiply Snap reported a second-quarter net loss of $422.1 million, or 26 cents a share, compared with a loss of $151.7 million, or 10 cents a share a year ago. Snap’s adjusted net loss was 2 cents a share, besting Street predictions of a loss of 21 cents a share, according to analysts polled by FactSet. Snap’s sales, which increased 13% to $1.11 billion, fell short of Street estimates of $1.14 billion. Daily active users rose 18% to 347 million. FactSet analysts had modeled 344.1 million. Executives declined to provide third-quarter guidance, citing “uncertainties related to the operating environment.” Snap shares initially fell more than 25% in after-hours trading. They closed the regular trading session up 5.5% to $16.37. Snap’s desultory results dragged down its social-media peers in extended trading Thursday. Shares of beleaguered Pinterest sank 7%, Meta fell 5%, Google was down 3% and Twitter dipped 2%. Withering macroeconomic conditions have prompted advertisers to slam on the brakes, while intensifying competition from the likes of TikTok and others has deepened the “headwinds,” Snap Chief Financial Officer Derek Anderson said during an abbreviated conference call with analysts following the results. A letter to investors was much blunter: “The second quarter of 2022 proved more challenging than we expected… We are not satisfied with the results we are delivering, regardless of the current headwinds.” “Platform policy changes [a reference to mobile iOS privacy changes made by Apple Inc.
that make it harder for advertisers to collect consumer data] have upended more than a decade of advertising industry standards, and macroeconomic challenges have disrupted many of the industry segments that have been most critical to the growing demand for our advertising solutions. We are also seeing increasing competition for advertising dollars that are now growing more slowly. Our revenue growth has substantially slowed, and we are evolving our business and strategy to adapt. We are working to reaccelerate growth and take share, but we believe it will likely take some time before we see significant improvements,” the letter continued. The letter, which also announced …