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After the company disclosed slackening digital advertising and hints of cost-cutting, its stock plummeted.
The first results from a major tech company that relies heavily on digital advertising are likely to portend choppy times for other companies.
There's more to worry about than the online-ad industry.
The company had a net loss of $422.1 million, or 26 cents a share, in the second quarter, compared with a loss of 151.7 million, or 10 cents a share, a year ago. The adjusted net loss was 2 cents a share, beating Street predictions of a loss of 21 cents a share. The company's sales fell short of expectations. The number of daily active users increased by 18%. They had modeled 344.1 million.
Executives wouldn't give third-quarter guidance because of uncertainties.
The shares of the company fell in after hours trading. The regular trading session ended with a 5.5% increase.
The results of the company dragged down its peers. Pinterest's shares sank 7%, Meta's fell 5%, and GOOGLE's shares were down 3%.
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", according to the chief financial officer.
The letter to investors made it clear that they were not satisfied with the results they were delivering.
More than a decade of advertising industry standards have been upended byPlatform policy changes made by Apple Inc. Competition for advertising dollars is increasing. Our revenue growth has slowed and we are trying to adapt. It will likely take some time before we see significant improvements as we work to reaccelrate growth and take share.
The letter warned of a slow down in hiring and further cost cuts if the stock price hits $40 in the next 10 years.
The stock price of the company is going up ahead of earnings.
To build a path to free cash flow break-even or better, even with reduced rates of revenue growth, executives wrote in a memo. We are taking a hard look at how to better drive productivity across our teams and we will continue to invest with a long-term perspective. A strict reprioritization of goals and initiatives across the company will be included in this.
The impact of Apple's privacy changes on performance advertisers has created a one-two punch to its entire ad business. Smaller advertising players are more affected by economic downturns.
John Blackledge warned in a note last week that the company is challenged by various macro headwinds.
The S&P 500 index is down 16% this year, while shares ofSnap have nosedived 65%.
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