Snap misses revenue estimate, shares plunge 30%
(Reuters) Snap missed Wall Street estimates for quarterly revenue, as the Snapchat owner continued to struggle to compete against larger rivals for digital advertising revenue, sending its shares down 30%.
Though its features are often copied by competitors, investors have long questioned Snap’s ability to hold its own against tech giants like Facebook owner Meta Platforms and Alphabet, which have more data to target ads.
Meta’s advertising sales surged 25% in the December quarter. Google’s ad business grew 11% as ad sales from YouTube increased 16% in the same period.
Snap has failed to show that it can capitalize on a healthy advertising market that has largely remained resilient despite economic uncertainty, said Thomas Monteiro, a senior analyst at Investing.com.
“It hints that Snap’s concerns are not macroeconomic in nature but mainly internal,” he said.
During a conference call with analysts, LightShed Partners analyst Rich Greenfield questioned Snap CEO Evan Spiegel on whether the company was “fundamentally disadvantaged” compared to larger rivals.
Spiegel said he still believed “there’s enormous opportunity for us to continue to grow our business.”