Shares Of Snap Have Fallen By 38% Following A Poor Earnings Report For The Company
In response to disappointing second-quarter results reported by Snap-on Thursday, Snap’s shares fell 38% on Friday.
Shares Of Snap Have Fallen By 38% Following A Poor Earnings Report For The Company.
The company missed Wall Street’s expectations when it comes to its top and bottom lines and plans to slow down hiring in the near future. Despite its results, the social media company attributed it to a variety of factors, including a challenging economic climate, slowing demand for its online ad platform as well as Apple’s 2021 iOS update, and competition from companies like TikTok.
According to the company, “In spite of the current headwinds we are facing, we are not satisfied with the results that are being delivered.”.
Compared to last year, Snap’s stock has lost more than 78% in value. As a result, Wall Street is not letting up. According to the latest earnings report, the company has been hit with a slew of analyst downgrades.
As a result of Goldman Sachs analysts’ assessment of the earnings report, they have downgraded the stock rating of the company from a buy to a neutral.
“While there may still be questions about how idiosyncratic this dynamic is (until Alphabet and Meta report their earnings next week), our own industry checks over the past two months were muted but more optimistic than what is shown in this earnings report,” they write.
JPMorgan analysts also downgraded Snap shares, saying that while the company did not specifically mention TikTok in its press release, they feel that the company’s rapid growth in monetization, as well as its strong engagement, are having a significant impact on Snap’s business.
According to the JPMorgan analysts, there was also a concern expressed regarding the absence of CEO Evan Spiegel from the analyst Q&A session and his lack of upfront commentary during the earnings report.
Clearly, Snap has an even bigger mountain to climb going forward, as evidenced by its 2Q results & how the call was handled, reiterating the company’s need to “re-establish a track record of execution” going forward.
It said that it expects revenue to be “approximately flat” in the third quarter as a result of “extremely challenging forward-looking visibility.” Snap did not give a forecast for the forecast period.