Snap stock volatile after hours on revenue shortfall, ‘challenging’ quarter


Snap Inc.’s stock gained in volatile after-hours trading Thursday despite quarterly revenue that didn’t meet Wall Street estimates.

The company reported a first-quarter net loss of $359.6 million, or 22 cents a share, compared with a loss of $286.9 million, or 19 cents a share a year ago. Snap’s adjusted net loss was 2 cents a share, besting Street predictions of a loss of 17 cents a share, according to analysts polled by FactSet.

Snap’s sales, which climbed 38% to $1.06 billion, fell shy of Street estimates of $1.07 billion. Daily active users rose 18% to 332 million.

Snap shares SNAP, -4.36% initially fell in after-hours trading, then rebounded to a 9% gain. It is currently flat.

“In addition to ongoing platform-related headwinds, supply-chain shortages and labor disruptions, rising inflation and geopolitical unrest are presenting challenges for a wider array of industry verticals than in the prior quarter,” Jeremi Gorman, Snap’s chief business officer, said during a conference call with analysts late Thursday.

Later in the call, Snap Chief Financial Officer Derek Andersen said that by the latter portion of Q1, advertisers in “a wider variety of industry groups reported concerns related to the macro operating environment, including continued supply chain disruptions, rising input costs, economic concerns due to rising interest rates, and concerns related to geopolitical risks stemming from the war in Ukraine.”

“We are concerned that the operating environment ahead could be even more challenging, leading to further campaign pauses or advertiser budget reductions,” Andersen warned.

The results illustrate that Snap, like Facebook parent Meta Platforms Inc. FB, -6.16%, is still vulnerable to TikTok and privacy changes imposed by Apple Inc. AAPL, -0.48% that make it more difficult for app makers to track customers via ads.

“Snap is more insulated from IDFA (Identifier for Advertisers) than Meta and the rise of TikTok, but it is not entirely immune,” Jasmine Enberg, principal analyst at Insider Intelligence, told MarketWatch. She expects growth of Snap’s worldwide online ad revenue to gradually slow, from 43% in 2022 (to $4.86 billion) to 30% in 2024 (to $8.75 billion).

Cowen analyst John Blackledge expected a 39% jump in sales, year over year, on rising average revenue per user, according to an April 13 note that maintained a market-perform rating and price target of $40.

Snap’s stock has plunged 37.5% so far in 2022. The S&P 500 index SPX, -1.48% has retreated 8% this year.

While Facebook created headlines last year for changing its name to Meta as part of a strategic pivot to the metaverse, Snap has spent the past few years building products and infrastructure in the same pursuit.

Last month, Snap announced its intention to buy NextMind, a Paris-based neurotech startup that has developed a headband that controls aspects of a computer, such as aiming a gun in a videogame, via thoughts. The technology is expected to be folded into future versions of Spectacles, Snap’s augmented-reality glasses.

Last year, Snap scooped up AR display maker WaveOptics for $500 million in its largest deal to date. It has also acquired Compound Photonics, another display tech company.

For its part, Meta has picked up a slew of startups to kick-start its metaverse push.

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