Skip to main content

Snapchat (SNAP) Layoffs: What This Means for the Stock

Snapchat's (SNAP) shares rose as early Q3 guidance surpasses expectations, boosting those of its competitors (10.86 +0.85).

After reporting early Q3 revenue guidance of roughly +8% yr/yr, Snap (SNAP +8%) moved higher today. 

Today's prediction is a welcome surprise since the social media giant stated last quarter that it would not provide official quarterly guidance owing to economic uncertainty. This is especially true given that as of late July, quarter-to-date sales growth was roughly flat.

SNAP's other announcements were not as optimistic, despite the focus on its preliminary revenue forecast today.

SNAP confirmed yesterday's rumors that it would let go of about 20% of its workforce and that Netflix (NFLX) had appointed two SNAP executives to run its advertising division.

Last quarter, SNAP drastically reduced its employment rate as part of its plan to improve its declining free cash flow. Company restructuring continues.

It is also important to note that sales growth is still significantly slower at 8%. For example, SNAP's revenue increased by +13% in Q2, +18% in Q1, +14% in 4Q21, and +17% in Q3.

Also, Q3 might be another quarter with dropping average revenue per user because inflationary pressures are diminishing consumers' discretionary purchasing power.

Last but not least, a deteriorating macroeconomic environment is having a one-two effect on users' spending on SNAP's platform and business expenditure on advertising.

SNAP is far from out of the woods despite its 8% revenue growth rate being significantly higher than the rate recorded only one month ago, especially in light of the severe competition from Instagram and TikTok (META).

Watch this video to get the technicals and what to expect moving forward.

Good trading!


Trading Risk Disclaimer

All the information shared is provided for educational purposes only. Any trades placed upon reliance of SharperTrades, LLC are taken at your own risk for your own account. Past performance is no guarantee. While there is great potential for reward trading stocks, cryptos, commodities, options, forex and other trading securities, there is also substantial risk of loss. All trading operations involve high risks of losing your entire investment. You must therefore decide your own suitability to trade. Trading results can never be guaranteed. SharperTrades, LLC is not registered as an investment adviser with any federal or state regulatory agency. This is not an offer to buy or sell stocks, cryptos, forex, futures, options, commodity interests or any other trading securities.

Popular posts from this blog

Cathie Wood Dives Into Bargain Tech Stocks Amid Market Volatility

Alibaba's Path to $105 Amidst Challenges and Opportunities [Unlocking Value]