Snap Inc., the parent company of Snapchat, took a big hit today as its valuation dropped by over 30%. This was in response to the release of its fourth-quarter earnings report. The company reported a revenue of $1.36 billion for Q4 2023, slightly higher than the $1.30 billion from the previous year. Unfortunately, this number fell short of Wall Street’s expectations, as they were hoping for $1.38 billion.
In a letter to stockholders, Snap attributed its flat revenue to a “challenging operating environment.” The company also announced that it would be laying off 10% of its workforce, or roughly 500 employees. This comes after Snap cut 20% of its headcount in 2022.
Snapchat has been heavily reliant on advertising income and has struggled to recover from Apple’s App Tracking Transparency feature. This feature allows iPhone users to block advertisers from tracking them when using an app.
Despite these challenges, Snapchat saw an increase in daily active users during Q4 2023, with a total of 414 million active users – up by 10% compared to the previous year. The company also noted that a staggering 800 million users worldwide visit Snapchat every month.
While half of these users are based in North America and Europe, it seems that Snapchat is now shifting its focus away from gaining users in emerging markets who predominantly use Android phones.
CEO Evan Spiegel stated that the company is shifting more focus towards user growth and engagement in their most monetizable regions. This strategic move aims to increase daily active usage and content engagement on Snapchat while improving ad performance and driving revenue growth.
Despite reporting a loss of $248.7 million for Q4, Snap showed improvement compared to the $288 million loss in Q4 2022. The stock initially rose during regular trading hours but plummeted by over 31% in after-hours trading following the release of their report.
These are definitely challenging times for Snap Inc., but with a renewed focus on user growth and engagement, there could be better days ahead for Snapchat!
