Snapchat-owner Snap (SNAP) beat views on third-quarter earnings late Thursday but fell short on sales and presented a fourth-quarter revenue outlook short of expectations due to various issues. Snap stock plunged.
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The company reported adjusted earnings of 17 cents a share on revenue of $1.07 billion. Analysts expected Snap to report adjusted earnings of 8 cents a share, on revenue of $1.1 billion.
However, Snap estimated fourth-quarter revenue in the range of $1.16 billion to $1.2 billion. That’s below analyst estimates of $1.36 billion
Snap stock dove 26%, near 55.30, during after-hours trading on the stock market today.
„We missed the lower end of our guidance by $3 million due to a few key factors, including changes to advertising tracking on (Apple’s) iOS and macroeconomic factors that have impacted our advertising partners,“ said Chief Executive Evan Spiegel, in comments with the earnings announcement.
„Our advertising business was disrupted by changes to iOS ad tracking that were broadly rolled out by Apple in June and July,“ he said. „While we anticipated some degree of business disruption, the new Apple-provided measurement solution did not scale as we had expected, making it more difficult for our advertising partners to measure and manage their ad campaigns for iOS.“
Snap Stock: Supply-Chain Issues Hurt Business
Moreover, Spiegel said global supply-chain issues worsened matters.
„This impact was compounded by the ongoing macroeconomic effects of the global pandemic, with our advertising partners facing a variety of supply chain interruptions and labor shortages,“ he said. „This in turn reduces their short-term appetite to generate additional customer demand through advertising at a time when their businesses are already supply-constrained.“
Spiegel added: „The ongoing magnitude and duration of these global supply and labor disruptions are inherently unpredictable, and in the meantime we are focused on supporting our partners in this uncertain environment.“
Snap’s earnings report precedes that of Facebook (FB), Twitter (TWTR) and Google-owner Alphabet (GOOGL), all due next week. All four rely heavily on digital ad spending, the source of most of their revenue.
Facebook reports earnings late Monday. Twitter and Alphabet report after the close Tuesday.
Venturing Into Augmented Reality
Snap calls itself a camera company. By downloading its Snapchat app to a smartphone, users have access to a wide range of features.
Its latest innovation lies in the cutting-edge field of augmented reality, which overlays digital images and other information into a person’s field of view. Also, applications for the technology include navigation, education, games, commerce and more. The good news for Snap is that not only is augmented reality entertaining, it’s also a revenue driver.
The IBD Stock Checkup tool shows that Snap has an IBD Composite Rating of 93 out of a best-possible 99.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
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