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Snap blames its underperforming Q3 2022 financial report to rising inflation and the war in Ukraine. The report tanked other stocks.
Snap (NYSE: SNAP), the first major social media company to release its Q3 2022 earnings, posted disappointing figures. For the period that ended September 30th, the prominent camera and social media company saw its shares plummet 25%. Furthermore, the California-based company warned that it would see no revenue growth in the typically busy holiday quarter. In a statement, Snap said that they “expect that the operating environment will continue to be challenging in the months ahead.”
According to the company, this projected letdown is primarily due to rising inflation and the war in Ukraine. As a result, these unsavory macroeconomic parameters could hurt tech companies dependent on advertising revenue. In a letter to investors, Snap explained that inflation is forcing some advertisers to slash their marketing budgets.
Snap Underwhelming Q3 2022 Numbers
Snap’s revenue for the third quarter came in at $1.13 billion, which represents an increase of 6% from the year-ago quarter. However, the camera and social media company came up short of the consensus estimate of $1.14 billion.
Snap branded its latest quarterly outing as its slowest revenue growth since going public five years ago. The shares of the Snapchat owner had been down 77% so far this year even before the latest dismal results. With Thursday’s debacle, Snap’s market capitalization ceded more than $4 billion in value after the bell.
Back in August, Snap announced that it would lay off 20% of its staff force and shut down a string of projects to save costs. These projects include mobile games, as well as novel initiatives like a flying drone camera. At the time, Snap chief executive officer Evan Spiegel noted:
“While we have built substantial capital reserves, and have made extensive efforts to avoid reductions in the size of our team by reducing spend in other areas, we must now face the consequences of our lower revenue growth and adapt to the market environment.”
In addition, the company also explained that such cuts will help save an estimated $500 million in costs annually. Furthermore, Spiegel admitted that such changes would not be easy and demanded decisive action from Snap. Commending the team’s adaptability at the time, the Snap CEO also added:
“I am proud of the strength and resilience of our team as we have navigated the myriad challenges of growing our business in a highly competitive industry during uncertain and unprecedented times.”
Internet Ad-Focused Platforms Slip Up
Following the less-than-stellar Snap Q3 2022 outing, the shares of other internet advertising-focused companies also dipped. For example, Facebook-parent Meta Platforms (NASDAQ: META) slid about 4%, while Alphabet (NASDAQ: GOOGL) retraced 2%. In addition, image sharing and social media service platform Pinterest (NYSE: PINS) saw its stock take an 8% dive.
The aggregate value in the late trading sell-off of internet ad companies’ stocks stood at more than $40 billion. This list also includes the lower share value of Swedish streamer Spotify (NYSE: SPOT) and American digital media hardware manufacturer Roku (NASDAQ: ROKU).