The parent company of social-media platform Snapchat, Snap Inc., lost over 30% of its valuation this afternoon after releasing its fourth-quarter earnings release. The company reported revenue of $1.36 billion for the fourth quarter of 2023 slightly topping the year-earlier figure of $1.30 billion. But the $1.38 billion in Q4 gross did not meet Wall Street expectations of $1.38 billion. And at $4.61 billion, 2023 revenue barely topped the $4.60 billion Snap generated in 2022.
In a letter to stockholders, Snap said that its flat 2023 revenue was “reflecting a challenging operating environment.” Just yesterday, Snap said that it will lay off 10% of its workforce or approximately 500 employees. Back in 2022, Snap eliminated 20% of its headcount. Heavily reliant on advertising income, Snapchat has been unable to recover from Apple’s App Tracking Transparency feature which allows iPhone users to choose whether they want to block advertisers from tracking them when using an app.
In the letter to stockholders, Snap said that it was “encouraged by the progress we are making with our ad platform,” but noted that it is battling a headwind with the conflict in the Middle East. The violence in the region cost Snap about two percentage points in growth, according to the company. Snapchat had 414 million active daily users during the fourth quarter of 2023, up 10% year-over-year. 800 million users worldwide visit Snapchat every month the company said.
Half of the users are in North America and Europe which indicates that the social media platform will no longer focus on gaining users in emerging markets who mostly use Android phones. The company did note that the number of Daily Active Users DAUs rose both sequentially and year-over-year on both iOS and Android.
Snapchat is known for its often hilarious lenses
CEO Evan Spiegel wrote in the stockholder’s letter, “We are shifting more of our focus toward user growth and deepening engagement in our most highly monetizable geographies. Focusing on these initiatives will help us increase daily active usage of Snapchat, deepen content engagement, improve performance for advertisers, and ultimately accelerate revenue growth and drive increased free cash flow.”
Snapchat incurred a loss of $248.7 million for the fourth quarter, an improvement from the $288 million in red ink Snap spilled during Q4 of 2022. For the three months, Snap lost 15 cents per share compared with an 18 cents per share loss during the same quarter in 2022. For all of 2023, Snap lost $1.32 billion which was a 7% improvement from the $1.43 billion it lost the preceding year. 2023 saw the company lose 82 cents per share, 8% lower than the 89 cents per share loss Snap suffered in 2022.
During the regular trading day, Snap shares rose 70 cents or 4.18% to $17.45 right near the 52-week high of $17.90. But that peak now seems very far away after the stock tumbled $5.45 to $12 in after-hours trading following the release of the report. That is a decline of 31.23%.
