Snap Inc. (NASDAQ: SNAP) runs the popular Snapchat platform, which was a tech pioneer in its short video format social site. Its poor results in Q4 point to a worsening climate for social media companies driven by wider macro pressures.
Snapchat Reports Slow Q4
Yesterday, Snap Inc. (SNAP) came out with its fourth-quarter results, which brought its first-ever flat quarter year-on-year, with revenue remaining constant at $1.3 billion. What was most concerning, however, was its figure for revenue per customer, which fell 15% from $4.06 to $3.47 in 12 months. Margins too, took a hit because of the static topline figures, dropping from a figure of -2% to -20% over the year. Overall, SNAP saw its net income figure of $23 million in FY21Q4 fall to a loss of $288 million in its latest quarter. These dismal results come despite the fact that the number of daily active Snapchat users actually grew from 319 million to 375 million over the year.
SNAP Bearing Burden of Tough Macro Climate
Snapchat miseries are not isolated in the present climate, as top tech giants such as Meta, Google, and others have all seen their performance take a hit despite a growing number of users. A primary reason causing this is the cutback on marketing budgets which has seriously affected advertising revenue. In fact, Snapchat was among the first companies in the social media spaces to begin cost-cutting initiatives, which include staff downsizing and resource reallocation away from low-promise projects. Moreover, the company is also experimenting with different approaches such as its direct-response business, which could cause revenue to fall by as much as 10% but would ensure sustainable growth in the longer term.
Conclusion
SNAP stock is a prime example of a stellar tech name that is currently struggling against wider macro pressures. Its forward-looking changes could be a last-ditch effort to change the company’s direction.