Snap Cites Ongoing Conflicts in the Middle East as Factor Impacting Digital Advertising Market Downturn

Tech giant Snap has just shared a new revenue report (i.e.: Q4) that had plenty of analysts talking.

The stats from the final quarter of 2023 were disappointing, to say the least, and well below the predictions generated from The Wall Street. Moreover, the news comes as stocks plunged 30% during extended trading time.

So how did the company do this? For starters, the revenue generated was $1.36 billion as compared to $1.38 billion.

On the other hand, the figures for daily global active users were 414 million as compared to 412 million. Meanwhile, the average revenue produced per user of the app was just $3.29 when compared to the $3.33 expected.

Snap says it has struggled to regain the downturn witnessed across the digital advertising market and now continues to report six straight quarters of growth in single digits only or a decline in a sale.

The firm says a lot of the findings were in place of the current terror witnessed in the Gaza Strip, West Bank Palestine, and therefore conflicts in the Middle East that started in October have had an intense impact.

They are certainly happy with the progress generated on the app but they always feel there is plenty of room for improvement and they are similarly working on better advertising on the platform by working with a wide range of partners. They estimated how the start of the conflict in that part of the world was a headwind to the YoY growth that’s close to 2 percentage points in this quarter, which was outlined inside a letter.

The levels of growth attained accelerated massively during Q1 but it was not as fast as expected by analysts. Moreover, Snap says its own forecast sales were not met and it fell from that seen in 2022. The midpoint for that range was below what analysts had expected or estimated too.

The figures for daily active users during Q1 would be 420 million as mentioned by the tech giant who says the figures topped the estimates featuring 419 million. But more bad stats were unveiled including how shares for Snap fell below $12 after the report generated yesterday.

During the start of the week, the company also outlined how it would be reducing 10% of the overall workforce which equals 500 employees. These cuts were being made to reduce hierarchy and ensure in-person collaboration was taking place.

The popular social media company also lost out against competitive rivals in terms of ads. Amazon, Meta, and Google’s parent firm Alphabet all managed to secure double-digit growth but that was not the case with Snap or even Pinterest.

Pinterest will respectively roll out its earnings report tomorrow and it’s going to be interesting to see what happens next.

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