Snap Inc (NYSE:SNAP) saw its stock price plunge in after-hours trading as the company behind Snapchat beat 3Q expectations on earnings but missed on revenue due to a decrease in advertising.
The social media company reported weaker-than-expected revenue of US$1.13 billion versus the $1.14 billion expected by Wall Street for the quarter ended September 30.
Revenue rose 6% year-over-year, and daily active users increased 19% year-over-year to 363 million.
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Santa Monica-based Snap said rising inflation has forced advertisers to reduce their marketing budgets.
"We expect that the operating environment will continue to be challenging in the months ahead," the company said in a statement.
Snap CEO Evan Spiegel said: “This quarter we took action to further focus our business on our three strategic priorities: growing our community and deepening their engagement with our products, reaccelerating and diversifying our revenue growth, and investing in augmented reality.”
In its report to shareholders, Snap said: “We made significant strides in the expansion and testing of our AR creation suite, and we have now onboarded over 15 new beta partners who are already designing Shopping Lenses created with our AR Image technology."
Snap also announced that its board of directors has authorized a stock repurchase program of up to US$500 million of its Class A common stock.
On the positive side, the company said that daily average time spent for Snapchatters 35 and older watching shows and publisher content increased by more than 40% year-over-year.
At the close, shares were trading at US$10.79, down 0.6%, but in after-hours trading, Snap’s share price dropped by 25.5% to $8.05.
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