The disappearing stock price vibes has returned to Snap Inc. as the camera-fueled social media company’s fundamental struggles don’t appear to be ending with the calendar having flipped to 2023.
Snap stock plunged 15% in pre-market trading on Wednesday following another ugly quarter on the back of a soft ad market and persistent changes to how its ad platform works.
“It seems like advertising demand hasn’t really improved, but it hasn’t gotten significantly worse either,” Snap CEO Evan Spiegel told analysts on the earnings call. “In general it seems like our partners are just managing their spend very cautiously so that they can react quickly to any changes in the environment.”
The company expects first quarter revenue will drop between 2% and 10%.
“We are concerned that Snap’s issues are intensifying, as recent ad platform changes further pressure revenue growth and depth of engagement on friend stories again decreasing year over year,” Jefferies analyst James Heaney wrote in a new note.
Heaney slashed his 2023 revenue estimates by 2%. He now sees fair value for Snap at $9 a share, down from $10 previously.
“Despite recent cost savings initiatives,” Heaney added, “we expect intensifying margin pressures.”
Snap reported fourth quarter revenue of $1.30 billion versus estimates of $1.31 billion. Adjusted operating profits tanked 29% to $233.3 million. While daily active users rose 17% from the prior year, it marked a slowdown from the 19% pace seen in the third quarter.
Adjusted earnings per share came in at 14 cents, beating consensus estimates of 11 cents, but reflecting a drop from last year’s EPS of 11 cents.
Yahoo Finance’s Ines Ferre contributed to this story.