Snap, the parent company of Snapchat, narrowed its losses to $249 million in the second quarter from $377 million a year ago. However, its forecast for the current quarter disappointed the market.
California-based Snap was down more than 17% in electronic trading after the New York Stock Exchange closed on Thursday. Popular with teenagers, the social network continues to struggle to attract advertisers and investors. It has exceeded expectations in terms of audience growth, with 432 million users using the app daily, and 850 million at least once a month. Its paid formula boosted by generative artificial intelligence (AI), Snapchat+, now has 11 million subscribers, compared to 7 million at the end of 2023.
In the first quarter, its 21% growth in turnover, better than expected, had reassured the market for a while. But this time, its quarterly revenues of 1.24 billion dollars (+16%) and especially its forecasts for the third quarter (between 1.34 and 1.38 billion) are lower than expected.
“Snap doesn’t look like it’s going to hold on to investor favor for long,” noted Jasmine Enberg of Emarketer.
“Despite strong subscriber growth for Snapchat+, investors have not been pleased with the slower growth in its core advertising business, especially given the impressive growth in active advertisers.”
Unlike Meta (Facebook, Instagram), Snap has never managed to earn enough advertising revenue to make an annual profit. In February, the group announced that it was laying off 10% of its employees, or around 500 people. It had already let go of 20% of its staff in the summer of 2022 (more than 1,200 people).
Sami Nemli With Agency / Les Inspirations ÉCO
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