Shares in Snap Inc (NYSE:SNAP) could continue to be hit after falling 35% on Wednesday following disappointing fourth-quarter results from the social media app, analysts say.
“Snap continues to suffer from lack of scale,” Oppenheimer analysts said in a note following the earnings release on Tuesday.
This includes through heated competition for advertisers, with the bank adding the firm suffered from “ceding revenue share to larger social media platforms”.
Snap reported revenue of US$1.36 billion for the final quarter of the year, missing analysts’ estimates for the figure to sit at $1.38 billion.
According to Oppenheimer, investors had seen the potential for Snap’s revenue to increase further than the 5% year-on-year growth recorded, following weakness in early October.
“Monetization has been impacted due to ad targeting and measurement challenges and increased competition for ad budgets,” the bank noted, with analysts adding Snap needed to develop products to appeal to older users in order to unlock upside.
Oppenheimer reduced 2024 pre-tax earnings guidance for Snap following the update from US$333 million to US$244 million, while also slighting bumping down revenue expectations to US$5.3 billion.
Shares in the Snapchat owner fell 35.24% to US$11.30 on Wednesday.