Shares of Snap Inc (NYSE: SNAP) tanked nearly 30% in after-hours trading after the company reported lower-than-expected revenue for its fiscal third quarter, blaming iPhone’s privacy update that weighed heavily on its advertising business.
Morningstar’s Mogharabi comments on the price action
On CNBC’s “Closing Bell”, Morningstar’s Ali Mogharabi said if executives on the conference call ensure that they are taking steps to address what Apple has done recently, it could calm the investors in short to medium term. He added:
Recently, they’ve made some moves that indicate they’re providing additional opportunities for advertisers. For example, Arcadia, the ad studio they begun to create that’ll give advertisers more flexibility to create better, augmented reality-based messages and potentially get the attention of the younger users.
Q3 financial performance
Snap said it lost $72 million in Q3 that represents a 64% decline from the same quarter last year. On an adjusted basis, it earned 17 cents per share on $1.07 billion in revenue. According to Refinitiv, experts had forecast 8 cents of adjusted EPS but a higher $1.10 billion in revenue.
The California-based company had 306 million daily active users in the recent quarter, with ARPU at $3.49. In comparison, analysts had called for 301.8 million DAUs and $3.67 of average revenue per user. Daily active users, however, were up 23% on a year-over-year basis.
Besides Apple’s privacy changes, Snap said labour shortage and supply chain constraints could also weigh on the fourth-quarter results. The NYSE-listed firm now forecasts up to $1.20 billion in revenue this quarter versus analysts’ consensus estimate of $1.36 billion.
Snap expects up to 318 million DAUs in the fourth quarter versus the experts’ forecast of 311.8 million.