It was added to the list of tech stocks that were destroyed.
After a period of uneasy telegraphing, Snap ripped the bandaid off in a quarterly report Thursday revealing its weakest ever quarterly sales growth. The blow to the company's primary business reflects a larger downturn in digital advertising and could potentially force the company to rein back its investment in less financially certain augmented reality endeavors.
The company's revenue for the quarter fell short of expectations. The company recorded a net loss of $422 million, which is more than the previous year's loss. Thursday's results failed to meet the company's expectations, despite decent daily active users growth.
While the continued growth of our community increases the long term opportunity for our business, our financial results for Q2 do not reflect the scale of our ambition. Regardless of the current challenges, we are dissatisfied with the results we are delivering.
Privacy changes in the app store are partly to blame for the decline in advertising revenues, according to the company.
Over the past year, there have been a series of significant setbacks. More than a decade of advertising industry standards have been upended by platform policy changes, and many of the industry segments that were most critical to the growing demand for our advertising solution have been disrupted.
The news caused the stock price to plunge. According to CNBC, the stock of the company has lost two-thirds of its value in the last two years. The company plans to reduce its rate of hiring in the future.
Digital advertising is in the midst of a downturn that mirrors the tech industry specifically. Poor advertising growth numbers caused Meta to lose $250 billion of value in a single day. Meta said the new tool could cost them $10 billion in revenue this year because of the decline. Although 22% growth in online ad sales in Q2 isn't bad, it's still a far cry from the 69% growth reported in Q2 2021. GroupM predicts that the ad revenue growth industry-wide will be 8.4% in 2022, down from 24.3% growth last year.
The side effect of pumping the brakes on its augmented reality glasses endeavors could be the slumping advertising performance of the company. The company isn't shy about wanting to spend a lot of money on technology, but it's possible that it won't spend as much if revenue falls.