Snap's revenue for the fourth quarter of last year fell short of expectations, and the guidance for losses in the first quarter of 2024 significantly exceeded analysts' forecasts, due to the ongoing downturn in the digital advertising market.
On February 6, Snap Inc., the American social media company, disclosed its financial results for the latest quarter. The report revealed that Snap's revenue for the fourth quarter of last year was $1.36 billion, slightly below the $1.38 billion anticipated by analysts. The adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the same period were $159.1 million, surpassing the expected $111.8 million.
For the first quarter of this year, Snap anticipates revenues to be between $1.1 billion and $1.14 billion, with analysts' projections at $1.11 billion. Concerningly, Snap expects its adjusted EBITDA for the first quarter to show a loss of between $55 million and $95 million, significantly below the anticipated loss of $32.7 million by analysts.
As a result, Snap's stock price plummeted by over 30% in after-hours trading on Tuesday.
Part of Snap's weak performance can be attributed to changes Apple made to its privacy policy in 2021, which made it more difficult for advertisers to track iPhone users, severely impacting Snap's advertising business.
In its earnings report, Snap mentioned that it had made progress in improving the effectiveness of brand advertising through machine learning, particularly in increasing the number of small and medium-sized advertisers. However, it estimated that "the outbreak of conflict in the Middle East posed about a 2% headwind to the performance in the fourth quarter."
Just a day before the release of Snap's earnings report, the company announced it would be laying off about 10% of its workforce, which amounts to approximately 500 employees. This marks the third significant round of layoffs for Snap in two years, following reductions of 20% and 3% in 2022 and 2023, respectively.
