Snap, the parent company of Snapchat, was met with a huge decline when it reported its first-quarter earnings Thursday. The company’s stock had fallen 20% in after-hours trading and its reported revenue dropped 7%, showing its first decline since its public release. The weak profits and ad revenue slump are chiefly to blame.
Ad demand has been hampered by updates to its platforms and the new privacy changes implemented by Apple, which make it more difficult for advertisers to utilize customer data or target their ads. YouTube also felt the pinch, seeing a 3% drop in ad revenue. Since Snap is a smaller company dominated by Gen Z users, it struggles to compete with the likes of TikTok.
Fortunately, larger companies like Facebook-parent Meta are beginning to show signs of a rebound. After posting a revenue beat, it appears that Meta is coming out of its slump and expecting revenue growth in the near future.
In response to its current financial struggles, Snap has made cuts in staff and slowed production on items like Snap-funded originals, minis, games, hardware, and more. To boost their revenue, the company began providing subscriptions to Snapchat+ for $4 a month, and recently launched My AI, an OpenAI-powered chatbot.
To attract more users and money, Snap recently launched AR Enterprise Services, a SaaS business that provides corporate clients with its powerful AR technology suite. Additionally, the company promises subscribers will have access to an innovative feature that lets My AI reply to them with a visual Snap by generating an image based on the conversation.
About the company:
Snap Inc. is a technology and camera company that builds products focused on human communication. It was founded in 2012 by Evan Spiegel, Bobby Murphy, and Reggie Brown. Snap Inc. is most well-known for its flagship product – Snapchat. The company is based in Venice, California and boasts over 3,000 employees worldwide. It is currently trading on the NYSE under the symbol SNAP.
About Evan Spiegel:
Evan Spiegel is the chief executive officer and co-founder of Snap Inc. He attended Stanford University and founded Snapchat in 2011 as part of a class project according to his bio on CNBC. He was recently named the 21st highest paid CEO in the U.S. according to Forbes, with a total compensation of $637 million in 2020.
