Shares in Snap Inc. fell more than 13% in after-hours trading Tuesday, after the company said it missed Wall Street expectations for revenue growth in the fourth quarter and offered a somewhat bleak outlook for the current quarter.
: Snap typically serves as a bellwether for other ad-supported internet stocks, like Meta and Pinterest, which are scheduled to report earnings in the next week.While Snap didn‘t issue any official revenue guidance for the first quarter of 2023, it said it's internally forecasting a year-over-year revenue decline for Q1.: In a letter to investors, Snap acknowledged that 2022 was a challenging year, due to macroeconomic factors, increased competition and "platform changes.
That language presumably refers to competition from TikTok and changes in Apple’s app tracking policies that made it harder for advertisers to target ads on apps like Snap. The company grew revenues only slightly last quarter compared to the same quarter in 2021. But for the whole year, a healthier ad market in the beginning of 2022 led to an overall revenue increase of 12% in 2022 over 2021.: Snap continued to cite weakness in demand for brand advertising, or TV-like ads that help companies tout their reputation. That business declined 11% last quarter compared to the same quarter in 2021.
Brand advertising is typically the first type of marketing spend that companies cut in tough economic times. Direct response ads, on the other hand, fared better, increasing 4% year-over-year last quarter. Snap touted continued improvements in the company’s direct response ad technology as a point of optimism moving forward.
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