Snap Inc. forecast current-quarter results below expectations on Thursday, citing stiff competition from larger rivals such as Meta Platforms (parent of Facebook and Instagram) and ByteDance's TikTok. This has led to an 18% drop in its shares after-market.
Jasmine Enberg, principal analyst at eMarketer, noted that Snap's light Q3 guidance has not alleviated investor concerns. While Meta was rewarded for its strong ad business performance, Snap is struggling due to its smaller scale and less established advertiser relationships. Meta recently forecast strong revenue for Q3 and beat June-quarter sales estimates.
Snap, considered a more experimental advertising platform, has seen its revenue growth pressured over the past few quarters. High interest rates have prompted enterprise clients in certain sectors to cut back on marketing budgets.
Snap's brand-oriented advertising revenue declined 1% year-over-year, driven by weak demand from consumer discretionary sectors, including retail, technology, and entertainment.
Snap's stock has been volatile, down about 24% as of Thursday's close and approximately 64% from its record high in October 2021. The company has heavily invested in its augmented reality platform, offering advertisers branded AI-generated filters and lenses.
For Q2, Snap reported revenue of $1.24 billion, missing analysts' estimates of $1.25 billion according to LSEG data. Pinterest also projected a muted Q3, dashing hopes of a swift rebound in growth.
Analysts suggest Snap could benefit from a potential TikTok ban in the U.S., which may drive advertisers to Snapchat to capture the attention of younger users. However, Snap's Q3 revenue forecast ranges between $1.32 billion and $1.39 billion, with a midpoint of $1.355 billion, slightly below Wall Street's $1.36 billion estimate.
Snap expects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) between $70 million and $100 million for Q3, below the expected $110.8 million.
Daily active users (DAU) grew to 432 million at the end of June, surpassing the 431.2 million estimate. The company expects DAU to reach 441 million in Q3.
Jasmine Enberg, principal analyst at eMarketer, noted that Snap's light Q3 guidance has not alleviated investor concerns. While Meta was rewarded for its strong ad business performance, Snap is struggling due to its smaller scale and less established advertiser relationships. Meta recently forecast strong revenue for Q3 and beat June-quarter sales estimates.
Snap, considered a more experimental advertising platform, has seen its revenue growth pressured over the past few quarters. High interest rates have prompted enterprise clients in certain sectors to cut back on marketing budgets.
Snap's brand-oriented advertising revenue declined 1% year-over-year, driven by weak demand from consumer discretionary sectors, including retail, technology, and entertainment.
Snap's stock has been volatile, down about 24% as of Thursday's close and approximately 64% from its record high in October 2021. The company has heavily invested in its augmented reality platform, offering advertisers branded AI-generated filters and lenses.
For Q2, Snap reported revenue of $1.24 billion, missing analysts' estimates of $1.25 billion according to LSEG data. Pinterest also projected a muted Q3, dashing hopes of a swift rebound in growth.
Analysts suggest Snap could benefit from a potential TikTok ban in the U.S., which may drive advertisers to Snapchat to capture the attention of younger users. However, Snap's Q3 revenue forecast ranges between $1.32 billion and $1.39 billion, with a midpoint of $1.355 billion, slightly below Wall Street's $1.36 billion estimate.
Snap expects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) between $70 million and $100 million for Q3, below the expected $110.8 million.
Daily active users (DAU) grew to 432 million at the end of June, surpassing the 431.2 million estimate. The company expects DAU to reach 441 million in Q3.