Is Snapchat back from the undead? 🧟‍♂️ It seems that for a spell, Snapchat was unghosted by advertisers, with the social media app’s parent Snap (SNAP) reporting revenue growth of 5.4% in their third quarter (Q3), to US$1.19 billion against an expected US$1.11 billion. This was in part due to a mid-year launch of two advertising features in Snapchat Story - Total Takeover and First Story - and Spotlight that have enabled advertisers’ digital content to jump the queue in a users’ video story sequence. 

But advertisers have retreated into the darkness. 🔦 Last week, Santa Monica-based tech company Snap steered clear of offering formal guidance for the current quarter, noting ‘the unpredictable nature of war’, adding that some of their advertisers have hit pause on ad campaigns due to caution following the onset of the Israel-Hamas conflict. 

Snap’s revenue is up 5% from the same quarter in 2022. Snap’s ‘major cost-cutting efforts’ and operational efficiencies have helped to steady earnings. This included the tech company joining in the biggest tech trend over the past year, laying-off up to 20% of their employees. The company has also overhauled their business with fresh releases, including what’s regarded as a major win in the social media sector by gaining more than 5 million premium Snapchat users - 75% of whom are aged between 13-34 - each stumping up US$3.99 for a monthly paid subscription. 🤳

Snap beat expectations, but did Wall Street set a low bar? Motley Fool’s Leo Sun suggests yes, adding however that Snap fielded three immense challenges over the past year: 

• TikTok and Meta Reels (META) have ramped up competition to gain younger eyeballs in their social media apps 👀
• Inflation hikes, labour costs, cut-backs and macroeconomic challenges have eaten into advertisers’ overall spend in digital advertising globally 📉
• Apple’s (AAPL) clamp down on privacy and data use in iOS stymied Snapchat’s targeted advertising for iPhone users.

While Snap’s stock briefly surged 20% in after-hours trading following last week’s company’s Q3 reporting, it’s since settled nearly a mere 0.2% below their Tuesday quarterly earnings reporting opening price.

A snapshot of Snap’s history 📖

Snap’s stock today is down 42.5% from their 2017 NYSE public debut. Snap broke the mould for tech companies by listing on the NYSE rather than the Nasdaq, the preferred stock exchange of Big Tech due to the exchange’s cheaper listing fees and support of Silicon Valley IPOs.

• Snap (SNAP) prompted a tsunami of more than 200 million shares traded after going public in March 2017, totalling 10% of the NYSE day’s trades, shooting their opening price of US$17 close 44% up
• In September 2021, the app company’s stock rose to an all-time high of US$83.11 as Snap became another beneficiary of tech stocks’ pandemic surge between March 2020 and June 2022
• As well as creator of image and video sharing messaging app Snapchat, Snap Inc owns personalised cartoon app Bitmoji and augmented reality tech brands Spectacles and Lens Studio, today holding a market cap of US$16.069 billion
• Since October last year, the company’s stock has fallen 3% from US$10.08 to today's stock price of US$9.76, while their year-to-date (YTD) stock has climbed just over 10%, starting the year at US$8.85 with this year’s high peaking in July at US$13.51
• Snapchat last week reported 406 million daily active users (DAUs), which is 300,000 more than StreetAccount expectations, also having surpassed 200 million monthly active users in India this May
• This September, Snapchat announced a new partnership with Microsoft (MSFT) with their product, My AI. My AI integrates Snapchat’s sponsored links with Microsoft Advertising’s Ads for Chat API to answer the app’s users’ questions, like where to grab food, which returns sponsored links. Since the AI bot’s beta launch exclusively to Snapchat users in April this year, more than 200 million people have sent more than 20 billion messages to My AI, according to Snap data. 

Riding the generative AI wave 🌊

Snap’s mid-year stock peak appears to have been paddling along the tech stock generative AI wave. This June, Snap announced news of their AI text-to-image tech, SnapFusion, which launched on Snapchat. It was co-created with Northeastern University and aims to ‘democratize content creation’. And Snap’s technology is fast. With a few short text prompts from users, SnapFusion can create AI images in under 2 seconds. 

Big Tech’s Wall Street wobbles 😵‍

Last week, Big Tech was ‘pummelled’. 🥊 The ‘Magnificent Seven’ which includes Apple (AAPL), Amazon (AMZN), Microsoft (MSFT), Meta Platforms (META), Alphabet (GOOGL, GOOG), Tesla (TSLA), and Nvidia (NVDA) has been ‘pummelled amid a tech sell off’ last week. And tech-based stocks weathered highs and lows of earnings last week:

Highs:

• Netflix (NFLX) reported a boost to subscriber numbers and beat on profit expectations
• Microsoft (MSFT) beat on earnings per share (EPS) and revenue, with cloud growth driving the uptick
• Amazon (AMZN) reported better-than-expected results that ‘sailed past’ analysts’ estimates

Lows

• Tesla (TSLA) missed analysts’ expectations posting their lowest profits it in two years
• Alphabet (GOOGL, GOOG) beat expectations for revenue and EPS, gaining their biggest profit since the pandemic shopping boom, but performed poorly in their cloud business
• Meta Platforms (META) posted strong results but lowered their guidance for Q4 citing advertising revenue challenges due to the Israel-Hamas war.

Whatever tech’s and Snap’s future, try not to get spooked. 👻

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