Pardon our French in the title, but we’ve given Snap the benefit of the doubt in our coverage for quite some time now. And yet, the company and its management continue to pass the buck for poor results onto external factors. 🤨
If you don’t believe us, let’s guess what the company blamed its revenue miss and light guidance on this time. We’ll give you a few seconds to think before moving to the next line… Lock in your answer
…Ok, times up. ⏳
If you guessed the Middle East conflict, you’re correct. You may also be creative enough to work on a flailing tech company’s executive or investor relations teams, so congrats on that. 🤦
More specifically, here’s what the company’s investor letter said about reporting six straight quarters of single-digit growth or sales declines:
“While we are encouraged by the progress we are making with our ad platform and the improved results we are delivering for many of our advertising partners, we estimate that the onset of the conflict in the Middle East was a headwind to year-over-year growth of approximately 2 percentage points in Q4…”
In the past, Snap has had some “cover” for weakness in the advertising market. But with industry leaders like Meta, Google, Amazon, and others firing on all cylinders, it’s clear these quarterly misses are primarily driven by internal issues, not external ones.
On that note, analyst Sean D. Emory made the excellent point that the company’s core revenue source is degrading. Although it has added millions of paid subscribers, its non-subscriber revenue (aka ad revenue) has declined materially. 📉
Until the company can address its revenue problems, it’s stuck cutting costs and preserving cash to buy more time. And investors are getting tired of being handed one giant L after another every time the company reports results.
We mean a literal L, too. Look at it painted in its stock chart after hours as shares crater 30% and the Stocktwits community reads “extremely bearish.” 🐻
We’ll have to wait and see if tomorrow’s market action changes anything, but it looks like another tough session ahead for the company. And personally, we’re over it. 🙄