SNAP stock crashes 25% on Q3 2022 earnings release

Snap Inc. (SNAP) shared its Q3 2022 earnings report today which shows the company missing revenue expectations despite beating EPS, as well as indications in its letter sent to investors that advertisers are spending less than they had in previous quarters.

As noted by outlets like CNBC, Snap’s Q3 2022 revenue grew just 6 percent from the previous year, marking the first time since the company’s public market debut in 2017 that revenue has seen growth in the single digits. Snap also reported a net loss of $360 million (400%) due in part to the company’s $155 million restructuring, with average revenue per user (ARPU) down as well by 11 percent from the previous quarter.

As a result of Snap’s report, SNAP stock fell a whopping 25 percent. Additionally, SNAP stock taking such a dramatic dip today has had a ripple effect, pulling GOOGL and META stock down along with it in after hours trading.

One reason why SNAP stock is tanking is due to statements in its letter to investors that center around how advertising partners are decreasing their marketing budgets amid inflation-driven cost pressures, rising costs of capital, and operating environment headwinds.

“Our revenue growth continued to decelerate in Q3 and continues to be impacted by a number of factors we have noted throughout the past year, including platform policy changes, macroeconomic headwinds, and increased competition. We are finding that our advertising partners across many industries are decreasing their marketing budgets, especially in the face of operating environment headwinds, inflation-driven cost pressures, and rising costs of capital,” the letter to investors reads.

“In some industries where topline growth remains strong, but businesses are experiencing input cost pressure due to inflation, we have observed reduced campaign budgets as businesses seek to offset input cost pressures. In many high growth sectors, businesses are reassessing investment levels amid the rising cost of capital. We experience this on our advertising platform in the form of decreased brand-oriented advertising spending, but also in the form of lower bids per action and lower overall campaign budgets.”

Other things of note in Snap’s Q3 2022 earnings report include the company announcing plans for a $500 million buyback of Class A shares. Snap has also stated that it won’t provide guidance for its fourth quarter, though it notes that revenue growth is likely to continue decelerating.

For more on Snap’s Q3 2022 earnings, check out the full report and read through the letter sent by Snap to its investors. And for more Snap news, be sure to read through some of our previous coverage as well on things like Snapchat (SNAP) sharing plans to to lay off 20% of its staff back in August.