Snap stock plunged Friday, which follows its second-quarter earnings report that missed estimates on the top and bottom lines as a weak advertising market hurt performance.
XSnap (SNAP) late Thursday reported an adjusted loss of 2 cents a share on revenue of $1.11 billion. Analysts expected a per-share loss of 1 cent on revenue of $1.14 billion.
The Snapchat parent also declined to give third-quarter guidance. Plus, it said it will "substantially slow our rate of hiring, as well as the rate of operating expense growth."
SNAP stock crashed 351% to 10.70 during morning trading on the stock market today.
Slowing Demand For Snap's Ad Platform
"While the continued growth of our community increases the long-term opportunity for our business, our financial results for Q2 do not reflect our ambition," Chief Executive Evan Spiegel said in written remarks with the Snap earnings release.
Spiegel said the disappointing results were due to slowing demand for its online ad platform.
"We are evolving our business and strategy to reaccelerate revenue growth, including innovating on our products, investing heavily in our direct response advertising business, and cultivating new sources of revenue to help diversify our top-line growth," he said.
Snap Earnings News Pulls Down Peers
Snap and other social media companies get about 97% of revenue from advertising, which has slowed in the past year.
Other social media stocks also fell. Facebook owner Meta Platforms (META) dropped 5.5%. Pinterest (PINS) fell 9.9% while Etsy (ETSY) declined 3.4%.
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Signs of advertising weakness emerged when Snap reported first-quarter results on April 21. That report, while showing a small miss on the top and bottom lines, came with a warning.
Challenges Hitting Snap Stock
Advertisers in a wide variety of industry groups have reported concerns related to the macro operating environment. Those worries include 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.
Another big problem is that Apple (AAPL) changed the advertising tracking on its operating system. Consumers got more privacy but advertisers lost out on valuable user-tracking data. The change has cost social media stocks billions in lost revenue.
"SNAP's commentary on forward-looking advertiser demand amid geopolitical conflict, supply chain, and inflation induced headwinds will be key," Cowen analyst John Blackledge said in a note to clients before the Snap earnings report.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
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