Snap stock is at a ‘total loss of confidence’ after the Q3 report

Snap Inc (NYSE: SNAP) crashed nearly 30% in extended trading after reporting yet another disappointing quarter and refusing to issue guidance citing “uncertainty”.

Gene Munster reacts to Snap’s results

More alarmingly, the social media company said revenue will continue to decelerate in the current financial quarter. Discussing the earnings report on CNBC’s “Closing Bell: Overtime”, Loup Ventures’ Gene Munster said:

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Snap stock down 30% is about decelerating revenue growth. It was 38% in March, 13% in June, 7.0% in Q3, they got it to flat. Pull this forward, Street will come out negative in March. This isn’t a growth story. This is a total loss of confidence.

A broader slowdown in advertising on fears of a recession, Apple’s privacy changes, and rising competition from TikTok remain a headwind for Snap Inc. According to Munster, though, there’s another challenge as well.

Fourth headwind is how they monetise. Today, Snap monetises primarily through a Discovery tab. They don’t have the same ultimate scroll you’d see in Instagram or TikTok. They need to solve the monetisation problem to solve revenue decline.

Snap stock crashed after the Q3 earnings report

• Lost $359.5 million versus the year-ago $72 million
• Per-share loss went up sharply from 5 cents to 22 cents
• Sales increased 6.0% year-on-year to $1.13 billion
• Consensus was 24 cents loss on $1.14 billion in sales

Ended the quarter with 363 million daily active users (up 19% YoY), as per the earnings press release. In comparison, analysts had forecast 358.2 million. Also on Thursday, Snap announced its first major share repurchase programme of $500 million.

In August, the Santa Monica-headquartered company announced a restructuring plan (source). Wall Street currently rates Snap stock at “hold”.