Investing.com -- Snap Inc. (NYSE:SNAP) shares sank 19% in pre-open Wednesday trading after the social media platform missed expectations on its guidance.
Snap did beat expectations for its second quarter, reporting a loss per share of 2 cents versus expectations for a loss of 25 cents a share. Revenue of $1.07 billion edged higher than expectations for $1.05B.
Global daily active users (DAUs) were 397 million, slightly higher than expected.
Snap said its guidance for the third quarter assumes that daily active users will be about 405M to 406M. Based on this it expects total sales between $1.07B and $1.13B, implying negative 5% to flat year-over-year growth, it said. The ranges are slightly below what analysts were forecasting.
Snap said it continues to invest in artificial intelligence and other infrastructure to improve the performance of its ad platform, drive deeper content engagement, and bring innovative product experiences to users.
“This forecast also assumes modest sequential headcount growth as we continue to carefully calibrate our operating investments to focus on the inputs most essential to the acceleration of topline growth,” it said.
Citi analysts said the Q3 outlook "highlights continued challenges" Snap is facing.
"Given a weaker than expected outlook for profitability in 3Q23, we expect shares to be pressured," they said.
Bernstein analysts flagged the 4th consecutive selloff for Snap in response to the quarterly earnings release.
"Once again, management highlighted all the things going well — engagement growth abroad and on Spotlight, growth in active advertisers, launch of new ad units and inventory — yet it's becoming increasingly difficult to reconcile all of these great soundbites reserved for a growth company, with the Snapchat we see before us where revenue growth remains down Y/Y. The offsetting drivers mean Snapchat is running to stay in the same place while peers enviously get back on the ad growth track," they wrote in a note.
Additional reporting by Senad Karaahmetovic