Snapchat is no exception to the gloomy economic context. The famous yellow logo app has unveiledthis Tuesday, January 31, its results for the fourth quarter of 2022. In its press release, the company announces an annual growth of 12% in its turnover compared to 2021, i.e. the weakest growth ever recorded since its introduction in Scholarship in 2017.
Snapchat’s share price fell 14%
In a letter to investors, Snapchat warned that its revenue could drop 2% to 10% in the first quarter of 2023. The company says it continues to be a victim of changes brought about by theApple’s App Tracking Transparency. The Apple brand forced, in April 2021, applications to request user consent to use their data and therefore use targeted advertising. Snapchat isn’t the only social network affected, Meta said it lost more than $10 billion in ad revenue. Companies are looking for solutions to circumvent the rules.
Snapchat clarified that it uses machine learning, a combination of learning models, to deliver relevant ads without having access to personal data. According to the statements, the latest improvements “may take time to work properly due to the drop in advertising on its platform.”
During the fourth quarter of 2022, the Los Angeles-based company attests to having generated $1.3 billion. An insufficient result for the company to generate a profit, the net losses reached 288 million dollars. They were 22 million during the same period, in 2021. Over the whole year, Snapchat lost 1.429 billion dollars against 487 million last year.
As at third trimester, these results are below analysts’ estimates predicting an increase in the company’s revenues. After the publication of the balance sheet, the value of Snapchat shares fell by 14%, and the fateful bar of 10 dollars. In 2022, the social network company’s share price collapsed by around 80%.
However, the social network attracted 12 million additional active users during the last quarter. 375 million people use the app worldwide. The company can also count on its premium subscription launched in July 2022. For 4.49 euros, users can acquire additional features. The launch of Snapchat+ was meteoric with 1 million subscriptions in less than a month, but today the service only has 2 million people. Like Blue for Twitter, this type of subscription makes the company less dependent on Apple’s advertising revenue and policy. However, this source of income only reaches 0.5% of the active user base.
Last summer, Evan Spiegel, co-founder and chief executive of Snapchat, promised that he would get the company back on track after the blow from Apple. The financial results for 2022 show that the slope is steep. The horizon of the social network indicates positive signals with the adoption of Snapchat+, the increase in the number of users, but it will have to face an unfavorable economic context increasing the mistrust of investors.