Snap Inc. (SNAP.N) disappointed Wall Street with its quarterly revenue, falling short of estimates and leading to a 30% drop in its shares. The Snapchat owner faces tough competition in the digital advertising space, struggling to keep up with industry giants like Meta Platforms (META.O) and Alphabet (GOOGL.O).
Despite being frequently imitated by competitors, Snap has yet to prove its ability to contend with tech behemoths possessing vast data for ad targeting. Meta’s ad sales surged 25%, while Google’s YouTube ad revenue grew 16% in the same period.
Analysts express concern over Snap’s inability to leverage a robust advertising market, attributing the challenges more to internal factors than economic conditions. Snap CEO Evan Spiegel, however, remains optimistic, emphasizing the company’s potential for growth.
To address its performance, Snap plans to pivot towards serving advertisers focused on driving sales and website clicks, rather than just brand awareness. Despite ongoing efforts, revenue for the fourth quarter missed analyst expectations, prompting the company to announce a 10% reduction in staff to refocus on growth.
Looking ahead, Snap aims to boost its user base, particularly in North America and Europe, where it generates significant revenue. Although daily active users exceeded estimates in the fourth quarter, concerns linger over stagnant growth in key markets.
With Snap projecting increased user numbers and revenue for the first quarter, the company faces a pivotal period in its quest to compete with industry giants. Following the disappointing results, Snap’s shares plummeted by 33% in after-hours trading.