The photo app Snapchat continues to gain new users, but the advertising business is not taking off. After stagnating sales in the past quarter, the developer Snap internally expects a decline in sales of between two and ten percent for the current quarter. That doesn’t go down well on the stock market. The stock fell nearly 15 percent in after-hours trading.
Snap has also recently slipped deep into the red. The bottom line was that last quarter saw a loss of around $288.5 million after Snap made its first quarterly profit in the company’s 11-year history a year earlier. The operating loss rose by a similar extent from 25.1 to 287.6 million dollars most recently. Sales remained at $1.3 billion, Snap announced after the US market closed on Tuesday.
For the whole of last year, Snap increased its sales by 12 percent year-on-year to $4.6 billion. However, the losses have grown even more. After a net loss of $488 million in 2021, the red has almost tripled to $1.43 million in 2022. At the same time, its operating loss has practically doubled, from $702 million last year to almost $1.4 billion in 2022.
The number of users increases, but advertising revenue does not
The number of Snapchat users recently rose to 375 million. That is three percent more than three months earlier and even 17 percent more than a year ago. At the end of 2021, there were still 56 million fewer users, with growth recorded worldwide, according to Snap.
Founder and boss Evan Spiegel referred to the weakening economy, which is slowing down the online advertising market. Snapchat continues to plague Apple’s iPhone privacy policies. App developers like Snap have to ask users for permission if they want to track their activity across different apps and websites to personalize ads. Many users reject this, which has made ad platforms less efficient, including Snapchat and Facebook.
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