Snap (SNAP) is hammered. Shares of the social media / camera company, which traded as high as $ 83.11 in September 2021, have since plunged amid rising inflation, the war in Ukraine and Apple’s privacy changes.
Shares of Snap collapsed an astonishing 74.5% so far this year from Monday, falling to $ 12 before the New York Stock Exchange closed.
Snap indicated that the pain could continue, warning in a document from the Securities and Exchange Commission last month that it is likely to be shorter than its Q2 guidelines when reporting its current quarterly results.
Snap – which has 332 million daily active users ̵[ads1]1; is far smaller than competitors Instagram, which continues to mimic the volatile messaging app’s countless features, and TikTok, which already has more than 1 billion users. While shares of advertising-dependent technology companies plummet across the board, it looks like Snap is taking the most brutal beating.
Google (GOOG, GOOGL) is also beaten, but shares have fallen only 22.9% so far this year, and fall below the wider S&P 500, but are still better than Snap. Heck, even Facebook and Instagram parent Meta (META) – down an incredible 47.8% so far this year – knocks out Snap.
This is not to say that Snap is not doing well on a basic level. In its Q2 2022 results report, Snap noted an 18% year-over-year increase in the number of daily active users (DAU) and a 38% year-on-year revenue jump to $ 1.06 billion.
Nevertheless, that type of growth was slower than performance in Q1 2021, when Snap saw DAUs grow by 22% from year to year and revenues skyrocket by 66%.
CEO Evan Spiegel acknowledged the decline in Q1 2022, and praised the company for continuing to grow despite a challenging macro environment.
Snap faces the same headwinds as other industry players, including the war in Ukraine, inflation, the specter of rising interest rates and Apple’s iOS privacy changes.
Called App Tracking Transparency, or ATT, as modified by Apple, allows users to opt out of letting apps track their movements across different apps and websites. By preventing apps from tracking users online, ATT makes it harder to target users with specific ads. As a result, advertisers no longer have a clear understanding of who sees their ads and how effective their campaigns are.
While Snap CBO Jeremi Gorman told investors during the company’s Q1 earnings interview that it’s working to improve ad targeting, the process will take time. For its part, Snap investors may flee sooner rather than later.
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