Snap shares plunge 35% after poor earnings report

In this screenshot, the CEO of Snap Inc. Evan Spiegel takes the stage at the 2021 Snap Partner Summit on May 20, 2021 in Los Angeles.

Snap Partner Summit 2021 – Snap Inc | Getty Images

Stock Click fell 35% on Friday morning, the day after the company reported disappointing second quarter results.

Snap fell short of Wall Street’s top and bottom line expectations and said it plans to slow down recruitment. The company attributed its results to the challenging economy, slowing demand for its online advertising platform, Apple iOS 2021 update and competition from companies like TikTok.

“We are not satisfied with the results we are achieving despite the current obstacles,” the company said.

Snap shares are down 77% since the start of the year. And Wall Street is not giving up. He was amazed many downgrades of analysts since the last earnings report.

Analysts at Goldman Sachs said Snap’s report was “generally negative” and downgraded their rating from Buy to Neutral.

“While there will be open questions about how peculiar these dynamics are (so far Alphabet as well as Meta next week’s earnings report), our own industry audits over the last two months have been muted but more upbeat than this earnings report,” they said.

JPMorgan analysts also downgraded Snap’s stock and said that while the company did not specifically mention TikTok, they believe TikTok’s rapid monetization growth and strong participation is having a significant impact on Snap’s business.

JPMorgan analysts were also concerned that CEO Evan Spiegel did not speak during analyst Q&A or provide upfront commentary. “Obviously with Q2 results and how the challenge has been handled, Snap has an even bigger hill to climb going forward,” they said, reiterating that Snap needs to “rebuild its execution track record.”

Snap said that this quarter’s revenue was “roughly flat.” It said it did not provide guidance for the third quarter because “predictability remains incredibly difficult.”

Jonathan Vanian of CNBC contributed to this report.