Snap shares plunge more than 20% on weak guidance
Snap shares fell more than 20% in extended trading on Thursday after the company reported guidance for the third quarter that trailed analysts' estimates.
Here is how the company did:
Snap said third-quarter revenue will be between $1.335 billion and $1.375 billion, or $1.355 billion in the middle of the range. Analysts were expecting $1.36 billion. The company expects adjusted earnings of $70 million to $100 million, trailing the $110 million average analyst estimate, according to StreetAccount.
The company said in an investor letter that it is making incremental investments in areas such as infrastructure, personnel and marketing, and that it continues "to experience the impact of an increasing legal and regulatory burden on our cost structure."
Second-quarter sales rose 16% from $1.07 billion a year earlier. Snap said sales were affected by "a weaker brand advertising environment for certain consumer discretionary verticals."
Monthly active users rose to 850 million from 800 million in February.
"Our community grew to reach more than 850 million monthly active users in Q2, with more than 11 million Snapchat+ subscribers," Snap CEO Evan Spiegel said in a statement. "We continued to scale our advertising platform with active advertisers more than doubling year-over-year."
Snap debuted its Snapchat+ subscription service in 2022 as a way to expand its business beyond online advertising and said earlier this year that the service reached an annualized revenue run rate of $249 million in 2023.
On Wednesday, Meta reported second-quarter earnings that beat analysts' expectations and said revenue, predominately derived from online advertising, during the period rose 22% year over year to $39.07 billion. Meta shares rose about 5% after