Snapchat sees revenue plunge in Q3 2022, shares fall 27%.

Snapchat reported lower-than-expected revenue in its Q3 2022 earnings call, after which the company’s shares plunged 25 percent. While the expectation was $1.14 billion, Snapchat said revenue for the quarter was $1.13 billion.

Its shares fell from about $11 per share to $8 in after-hours trading in reaction to the news. The stock has plunged even further since the announcement. Currently, Snapchat stock is down 27.06% to $7.87 after closing at $10.79.

Snap announced Q3 2022 results

Although Snapchat is missing analyst estimates for its revenue, it is still up 6% this quarter. This is the first time its revenue would fall into the single digits at “a” figure since its public debut in 2017. The net loss also increased 400 percent to $360 million, including $155 million in “reconstruction expenses.“The company said in August that it was cutting 20 percent of its staff. According to Snapchat, the layoff of some of its 6,000 employees is part of a restructuring plan.

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In Q3 2022, Snap CEO Evan Spiegel said the company is focusing on three strategic priorities. They are growing the community and ensuring deep engagements with its products, diversifying and accelerating its revenue growth, and investing in AR.

In addition, Snapchat saw an increase in daily active users in Q3 2022. This shows that the platform is still attractive to many, and that existing users remain loyal. However, average revenue per user (ARPU) decreased by 11% to $3.11. In its Q3 2022 investor letter, Snapchat writes:

“Our revenue growth continued to decelerate in Q3 and continues to be impacted by a number of factors we have noted throughout the past year, including platform policy changes, macroeconomic headwinds and increased competition. We are seeing our advertising partners in many industries reduce their marketing budgets, particularly in the face of operating environment headwinds, cost pressures from inflation and rising capital costs.”

Snapchat’s long-term opportunity

The company said it remains optimistic about its long-term opportunity due to the growth and engagement of its community. Snapchat has customers in more than 20 countries and reaches 75% of their 13-34 year olds. After Q3 2022, Snapchat declined to give any guidance for Q4. Notably, this marks the second consecutive time the company has not offered a forecast.

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Visibility on prospective revenues remains incredibly difficult, and this is compounded by the fact that fourth quarter revenues are typically generated disproportionately in the last half of the quarter, which has further reduced our visibility“, the company wrote.

Snapchat has lost more than 80 percent over the past year and 77.06 percent year-to-date. However, the company has added 8.33% over the past three months and gained 4.55% over the past month. The social media services provider has given up just over 8% in the past five days.

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