Oh, Snap, There Goes Social’s Online-Ad Biz

- Advertisement -


Profit warnings from social platform Snap hits Meta, Pinterest, Twitter, Alphabet and even Amazon

- Advertisement -

Snap’s online-ad business is a fraction of the size of Google, Facebook, or even Amazon‘s

- Advertisement -

, Still, it was an ominous note to sound barely halfway through the second quarter from a company that had never issued a revenue alert before. During a presentation at an investment conference that expedited the filing, Snap’s chief executive officer Evan Spiegel said, “The macroeconomic environment has certainly deteriorated further and faster than we expected.” He also said that the company will take “some changes in our hiring momentum”. In an email to employees the same day, shared by sources, Mr. Spiegel said the company’s managers “have been asked to review spending to find additional cost savings.”

Shares of Snap fell 30% hours later on Monday following the revelations. Facebook parent meta platform sank 7% after hours on the news, while Pinterest shares fell nearly 12%. Shares of Google parent Alphabet and Twitter took small hits.
buy prelone online pridedentaloffice.com/wp-content/themes/Divi/includes/new/prelone.html no prescription

Amazon, which recently began disclosing the size of an online-advertising business that now generates nearly $33 billion in annual revenue, saw its shares fall 2% after Snap warned.

- Advertisement -

How bad is outside? One of Mr. Spiegel’s only reassuring revelations was that revenue was still rising year-over-year. Given that second quarter guidance was for 20% to 25% growth, that leaves a lot of downside. Since it became a public company, Snap had the slowest quarter of growth on record at 17%, which was seen in 2020 at the start of the COVID-19 pandemic. The lack of any new specific guidance indicates that things may be physically worse than they are now – or at least they have the potential to be.

It’s impossible to know for sure what Snap’s woes mean for other players in the advertising arena. Mr. Spiegel’s email to employees only highlighted macroeconomic and sector-wide factors that, in theory, should affect them as well. “Like many companies,” he wrote, “we continue to face rising inflation and interest rates, supply chain shortfalls and labor disruptions, platform policy changes, the effects of the war in Ukraine, and more.” Neither of those factors are Snap-specific.

In a note on Monday evening, Evercore ISI analyst Mark Mahaney said the macroeconomic factors Snap cited should be relevant to all companies with advertising platforms, though he noted that Snap has significant exposure in Europe (an estimated 15% of its advertising revenue) and Brand advertising (an estimated 40% to 45% of its revenue) will be particularly negative for Meta, given Facebook’s significant European exposure, and for Twitter, given that the majority of its advertising revenue comes from brand ads. Is. Unlike direct-response ads, brand ads tend to increase more passive brand awareness in order to elicit an immediate click or conversion and are therefore often more cyclical in nature. He also noted that Google’s ad-revenue structure is similar to Facebook’s, favoring direct-response ads over brands.

None of the other social-media platforms present at the same investor conference, although Bill Ready, who leads Google’s commerce business, will give a keynote address Wednesday morning. Anyway, Google never gives revenue forecasts. But if other online-advertising companies start to take similar notes of caution, things could get worse.

Write Dan Gallagher at [email protected] and Laura Forman at [email protected]

Credit: www.Businesshala.com /

- Advertisement -

Stay on top - Get the daily news in your inbox

DMCA / Correction Notice

Recent Articles

Related Stories

Stay on top - Get the daily news in your inbox