Snap’s shares plummeted Wednesday as the company announced lower-than-expected revenue during the final quarter of 2022.
Key Details
- The Snapchat parent company’s shares fell 10.3% on Wednesday—the most significant decline that day of any company with more than $10 billion in market capitalization.
- Stocks declined after the company reported $1.3 billion in revenue at the end of 2022, below the previous estimate.
- The company also said in a letter to its investors that it anticipated a continued revenue decline of 2% to 10% during the first quarter of the year.
- Over the last several years, the social-media company has struggled to compete with rivals like TikTok, Meta Platforms, and Alphabet.
- After the earnings release, UBS analysts downgraded Snap’s rating from a buy to a neutral level, Forbes reports.
- While Snap declined, the rest of the market generally gained after positive updates from the Federal Reserve encouraged investors.
Why it’s news
With increased competition from other social-media platforms, Snapchat has struggled to distinguish itself. Since its market high in 2021, the company’s shares have fallen 88%.
The company continues to struggle this year, but Bank of America analysts pointed out one ray of hope for the company—TikTok could be banned. If a nationwide ban of TikTok is passed, Snapchat could absorb the Chinese-based social-media company’s market. Both apps provide short-form video content.
However, a TikTok ban is still a long shot for Snapchat. Since its valuation reached $131 billion in September 2021, the company has declined $114.7 billion. Additionally, Snapchat cofounder and CEO Evan Spiegel’s net worth has dropped from an $11 billion high in 2021 to $2.7 billion.