Snap shares fell more than 30 per cent on Friday, reaching their lowest level since the pandemic, after the company forecast zero revenue growth, implying that the social media sector, which relies heavily on digital advertising, will face greater difficulties in the future.
This comes as the company faces shrinking advertising budgets in an uncertain economy. Snapchat’s parent company said in a letter to investors that revenue growth was slowed by several factors, including increased competition and jitters from its core advertisers.
Advertisers have used Snap’s platform to capitalize on the app’s popularity among teens and young adults. However, Apple’s privacy changes have made it more difficult to track and measure ads on Snapchat, leading big brands to shift ad spending to larger platforms that reach more people.
Snap’s earnings report heralds what is expected to be a bleak tech earnings season, with layoffs, hiring freezes and other cost-cutting measures in the industry becoming increasingly common amid fears of an impending recession.
Snap is also facing increasing competition from fast-growing competitors such as TikTok and is still in the digital ad business after Apple’s privacy changes that have made it harder for marketers to target users with ads.
The sources for this piece include an article in Reuters.