Snap Inc. stock rose in volatile after-hours trading on Thursday, despite quarterly sales falling short of Wall Street estimates.
The company reported a net loss of $359.6 million, or 22 cents a share, in the first quarter, compared to a loss of $286.9 million, or 19 cents a share, a year ago. Snap’s adjusted net loss was 2 cents a share, beating Street’s predictions of a loss of 17 cents a share, according to analysts polled by FactSet.
Snap’s revenue, which rose 38% to $1.06 billion, fell short of Street’s estimate of $1.07 billion. Daily active users grew 18% to 332 million.
Snap shares SNAP, -4.36% initially fell in after-hours trading before rebounding to gain 9%. It is currently flat.
“In addition to ongoing platform-related headwinds, supply chain shortages and labor disruptions, rising inflation and geopolitical unrest are posing challenges across a broader range of industry verticals than in the previous quarter,” said Jeremi Gorman, Snap’s chief business officer, during a conference call with analysts late Thursday .
Later in the conference call, Derek Andersen, Snap’s chief financial officer, said that through the end of the first quarter, advertisers in “a wider variety of industry groups reported concerns about the macroeconomic environment, including ongoing supply chain disruptions, rising input costs, and economic concerns due to increasing… Interest and geopolitical risk concerns related to the war in Ukraine.”
“We are concerned that the upcoming operating environment could become even more challenging, which could result in further campaign pauses or advertising budget cuts,” Andersen warned.
The results show that Snap, like Facebook parent company Meta Platforms Inc. FB, -6.16%, is still vulnerable to TikTok and privacy changes imposed by Apple Inc. AAPL, -0.48%, which it Make it difficult for app makers to track customers via ads.
“Snap is more isolated from IDFA (Identifier for Advertisers) than it is from Meta and the rise of TikTok, but it’s not entirely immune,” Jasmine Enberg, principal analyst at Insider Intelligence, told MarketWatch. She expects Snap’s global online ad revenue growth to gradually slow, from 43% in 2022 (to $4.86 billion) to 30% in 2024 (to $8.75 billion). Dollar).
Cowen analyst John Blackledge expected revenue to jump 39% year over year on rising average revenue per user, according to a May 13 release.
Snap stock is down 37.5% so far in 2022. The S&P 500 Index SPX, -1.48%, is down 8% this year.
While Facebook made headlines last year for changing its name to Meta as part of a strategic move toward the Metaverse, Snap has spent the last few years building products and infrastructure with the same goal.
Last month, Snap announced its intention to buy NextMind, a Paris-based neurotech startup that has developed a headband that uses thought to control aspects of a computer, such as aiming a gun in a video game. The technology is expected to be integrated into future versions of Spectacles, Snap’s augmented reality glasses.
Last year, Snap landed AR display maker WaveOptics for $500 million in its biggest deal yet. It also acquired Compound Photonics, another display technology company.
For its part, Meta has picked up a slew of startups to fuel its Metaverse push.