Snap, the parent company of Snapchat, reported a net loss of $248 million for Q4 2023.
This loss, while an improvement from the previous year, triggered a significant market response.
Despite a narrower loss and results beating analyst expectations, Snap’s shares took a nosedive by approximately 30% in after-hours trading.
This marks the second consecutive quarter of revenue gains following declines earlier in the year.
Snap acknowledged the conflict in the Middle East as a factor hindering year-over-year growth, contributing to a 2 percentage point headwind in Q4.
Despite challenges, CEO Evan Spiegel struck an optimistic tone, highlighting 2023 as a pivotal year for Snap.
He emphasized the transformation of the advertising business and the expansion of the global community to 414 million daily active users.
In a surprising move, Snap announced a 10% reduction in its workforce, cutting around 500 jobs.
This decision follows previous layoffs in 2022 and 2023, signaling ongoing cost-cutting efforts.
Analysts, including Thomas Monteiro from Investing.com, expressed concern over the necessity of recent layoffs, urging Snap to reassess its strategy, particularly regarding monetization.
Snap’s results are viewed in comparison to Meta’s outstanding 200% year-over-year profit growth reported last week.
Questions arise about Snap’s ability to capitalize on resilient ad spending across diverse sectors.
Snap faced challenges following Apple’s changes to app tracking policies in 2021.
Partnerships and Diversification:In a bid to compete with rivals like Instagram and TikTok, Snap entered a partnership with Amazon.
This deal enables users to shop directly through Snapchat. The Snapchat+ subscription program, aimed at diversifying revenue, boasts over 7 million subscribers.
Snap reported a 10% year-over-year growth in daily active users, reaching 414 million in Q4.
However, average revenue per user globally dipped by 5% compared to the same quarter last year.
Looking ahead, Snap anticipates daily active users to grow to 420 million in the current quarter.
The company projects year-over-year revenue growth of 11% to 15% for the first three months of 2024.
Snap is actively working on revamping its public image, seeking to distance itself from regulatory concerns faced by social media peers.
The recent brand campaign, “Less Social Media. More Snapchat,” emphasizes its focus on private, personal conversations.
In a Senate hearing focused on platform safety for young users, Snap CEO Evan Spiegel apologized for instances where children had faced harm.
This sincere move aims to address safety concerns and rebuild trust with users and stakeholders.