(Bloomberg) — Shares of Snap Inc. fell more than 30% in premarket trading Wednesday after the Snapchat app’s parent company reported disappointing revenue in the holiday quarter.
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In the fourth quarter, revenue rose 5% to $1.36 billion, falling short of analysts’ average estimate of $1.38 billion. For the full year, revenue growth was flat, “reflecting a challenging operating environment,” according to a letter to shareholders on Tuesday.
Chief Executive Officer Evan Spiegel has led the company through a sweeping restructuring over the past two years, cutting jobs and eliminating projects that don’t boost revenue or user growth. On Monday, the Santa Monica, Calif.-based company said it was cutting an additional 10% of its workforce this year in an effort to reduce hierarchy and promote personal collaboration.
But despite the recent round of layoffs, Snap forecast a loss of $55 million to $95 million in adjusted earnings before interest, taxes, depreciation and amortization in the current period, much wider than the $33 million loss analysts were expecting. Is.
Shares were down about 31% in premarket trading after closing at $17.45 in New York on Tuesday.
Snap and Meta Platform Inc. were hit hard by changes Apple Inc. made to its privacy settings in 2021, making it harder for advertisers to track iPhone users. Meta has bounced back, reporting a 25% increase in sales in the fourth quarter, its biggest quarterly growth in two years, while Snap is still recovering.
Snap has made changes to its core business to improve ad targeting and measure its effectiveness, as well as expand its direct-response advertising offerings.
In a letter to shareholders, the company said it was “encouraged by the progress we are making with our advertising…”