Snap stock falls amid concerns over company growth | Technology

Snapchat’s owner narrowly missed Wall Street’s hopes as it continues to grapple with slowing digital advertising. The social media company’s stock price fell by nearly a third.

Snap said it was “encouraged by our progress,” but cited factors such as the Middle East conflict that had hurt its business.

Snap’s revenue rose 5% to $1.36 billion in the three months ended Dec. 31, missing analysts’ expectations for $1.38 billion. Net loss narrowed from $288 million to $248 million.

Investors remained concerned about the company’s growth. The company expects revenue for the current quarter to be between $1.1 billion and $1.14 billion. Analysts had expected about $1.1 billion.

Snap shares fell 30% to $12.21 in after-hours trading in New York.

Alphabet, owner of Google and YouTube, the world’s two biggest advertisers, and Meta Platforms, owner of Facebook and Instagram, are in a better position. Smaller companies in the market continue to struggle.

Santa Monica, Calif.-based Snap expects to end 2023 with about 414 million daily active users, a number that will rise to 420 million in the first quarter.

The group told investors on Tuesday that it was “shifting our focus to user growth and deepening our engagement in our most profitable regions, including North America and Europe.”

Evan Spiegel, CEO of Snap, said: “2023 was a pivotal year for Snap as we continued to transform our advertising business and grow our global community, reaching 414 million daily active users. It has 7 million paying subscribers.

“Snapchat strengthens our relationships with friends, family and the world, and this unique value proposition has provided a strong foundation on which to build our business for long-term growth.”

The company released its financial results a day after announcing it would lay off about 10% of its global workforce, or about 530 people, as part of an organizational restructuring to “reduce hierarchy and increase in-person collaboration.” . Last week, the company recalled its Pixy selfie drone due to the risk of fire due to battery overheating.