Q2 revenue fell short of expectations! Snap's stock price plummeted and its market value evaporated by a quarter!

It is learned that after releasing the bleak Q2 financial report, Snap announced plans to "significantly reduce" recruitment and adjust its strategy. It attributed this to severe macroeconomic conditions and expressed dissatisfaction with the Q2 performance. Snap's market value lost a quarter after the financial report was released.

The Los Angeles-based social media company's revenue rose 13% to $1.11 billion in the three months ended June, just below analysts' consensus estimate of $1.13 billion. Snap's daily active users grew 18% to 347 million in the second quarter.

Snap's net loss widened 178% to $422 million compared with the same period last year, far higher than analysts' estimates of $340 million, according to data compiled by S&P Capital IQ. Snap issued an unexpected warning in May that revenue growth would be 20%-25% slower than it had originally forecast. The reason was the rapidly deteriorating macroeconomic environment. Snap declined to provide guidance for third-quarter revenue or earnings, citing "uncertain operating environment."

In the future, Snap plans to focus on product innovation, diversified revenue and investment in its direct response advertising business to cope with the economic slowdown. In addition, Snap also said that it is currently cutting its digital advertising budget due to the broader economic slowdown and inflationary pressures, as well as Apple's privacy changes that make it more difficult to target ads and measure the success of ad campaigns. And as new competitors such as TikTok continue to erode market share, it has also brought new challenges to Snap.

The social media platform has seen explosive growth over the past two years as entertainment-hungry users spent more time and money online during lockdowns, but has been hit by a broad stock sell-off in recent months that has forced tech giants such as Meta and Google to freeze hiring and announce other cost-cutting measures.

Snap's stock price fell about 25% to $12.33 per share after its earnings report fell short of expectations. Other technology stocks that rely on advertising businesses were also hit to varying degrees: Meta fell 5% in after-hours trading, while Google's parent company Alphabet also fell 3%. Snap said it intends to improve productivity by reducing its hiring rate and "rigorously recalibrating goals and plans across the company." It also authorized a repurchase plan of up to $500 million of Class A common stock.

Editor ✎Estella/

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