In this screenshot, the CEO of Snap Inc. Evan Spiegel takes the stage at the Snap Partner Virtual Summit 2021 on May 20, 2021 in Los Angeles.
Snap Partner Summit 2021 – Snap Inc | Getty Images
Shares of Snap fell 35% on Friday morning, a day after the company reported disappointing second-quarter results.
Snap missed Wall Street’s top- and bottom-line expectations and said it plans to slow hiring. The company attributed its results to a challenging economy, slowing demand for its online advertising platform, Apple’s 2021 iOS update and competition from companies like TikTok.
“We are not satisfied with the results we are achieving, regardless of the current headwinds,” the company said.
Snap shares are down 77% year-to-date. And Wall Street isn’t giving up. It was hit by multiple analyst downgrades after the latest earnings report.
Analysts at Goldman Sachs said Snap’s report was “broadly negative” and cut their rating from buy to neutral.
“While questions will remain open about how idiosyncratic this dynamic is (until Alphabet and Meta report earnings next week), our own checks on the industry over the past two months have been muted but more upbeat than this earnings report,” they said them.
Analysts at JPMorgan also downgraded Snap’s stock and said that while the company didn’t specifically call out TikTok, they believe TikTok’s rapid monetization growth and strong engagement are having a significant impact on Snap’s business.
JPMorgan analysts were also concerned that Chief Executive Officer Evan Spiegel did not speak during a Q&A with analysts and did not offer an advance comment. “Obviously with the second quarter results and the way the call was handled, Snap has an even bigger hill to climb going forward,” they said, reiterating that Snap needs to “restore execution results.”
Snap said revenue this quarter was “roughly flat.” The company said it did not provide guidance for the third quarter because “looking ahead remains incredibly challenging.”
CNBC’s Jonathan Vanian contributed to this report.
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