Snapchat has recently slipped deep into the red. The bottom line is that there was a loss of around $288.5 million in the last quarter after a profit of $22.5 million a year earlier. Sales remained at $1.3 billion, Snap announced after the US market closed on Tuesday. The stock fell nearly 15 percent in after-hours trading. The paper lost more than two-thirds of its value within a year.
The number of users recently increased from 363 to 375 million within three months. What is striking here is that the number of users in the important North American market has been stuck at the 100 million mark for six months. Snapchat recently had 92 million users in Europe – four million more than three months earlier.
Subscription model as a new source of income
Founder and boss Evan Spiegel referred to the weakening economy, which is slowing down the online advertising market. At the same time, he sees a silver lining: Although demand from advertising customers has not improved, it has not deteriorated further either, he said in a conference call with analysts.
Snapchat continues to plague Apple’s iPhone privacy policies. App developers must ask users for permission to track their activity across different apps and websites to personalize ads. Many users rejected this, making ads on Snapchat and Facebook, among others, less efficient.
Snap is therefore setting up a new platform for advertisers. The company emphasized that while the conversion costs sales in the short term, it is necessary in the long term and progress is being made to improve the system. A new mainstay of the business, in addition to advertising, is also to be a subscription model in which users pay for additional functions such as personalized notification tones or picture backgrounds. Most recently, over two million users took out such a subscription.
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