The Snapchat owner's results are in contrast to strong
advertising sales that rivals reported, a sign that advertisers are gravitating
towards larger, stable companies amid an uncertain economy.
Snap, whose shares nearly doubled last year, was on track to
lose roughly $9 billion in market value, based on its share price of $11.98 on
Wednesday, if premarket losses hold. Rival Pinterest also fell nearly 4%.
"Once again, Snap's results have disappointed
investors," said Jasmine Enberg, principal analyst at Insider
Intelligence, adding the company's rebound hasn't kept pace with the big tech
titans.
Meta's advertising sales surged 25% during the holiday
quarter and Alphabet's Google ad business grew 11% as ad sales from YouTube
increased 16% in the same period.
"Coming so soon after the stellar Meta performance, a
nagging worry about the way Snap is being run has turned into a crisis of
confidence," Susannah Streeter, head of money and markets at Hargreaves
Lansdown, said.
The company's fourth-quarter revenue came in at $1.36
billion, missing estimates of $1.38 billion, according to LSEG data.
Snap said earlier this week it would lay off 10% of staff,
or 528 employees, in order to "invest incrementally" in the company's
growth over time.
"While the layoffs show a company unafraid to lean out
... cost per employee remains well above peer benchmarks, while ad revenue
growth remains well below," Bernstein analyst Mark Shmulik said.
Snap's shares trade at 88.37 times expected earnings,
compared with a forward PE of 22.71 for social media rival Meta and 29.47 for
Pinterest.
"Investor patience has been tested, and it's clear
fewer are optimistic about Snap's ability to bounce back from the ad
slump," Streeter said.
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