Snap Inc., the parent company of Snapchat, announced on Tuesday that it will not issue a second-quarter financial forecast due to economic uncertainty. The decision comes as US tariffs threaten to disrupt the global economy and digital advertising budgets, leading to a 13% decline in Snap’s shares.
Despite these challenges, Snap reported strong Q1 earnings, with revenue rising 14% to $1.36 billion, slightly beating analysts’ estimates of $1.35 billion. The company also saw a significant increase in its subscription service, Snapchat+, which added 59% new subscribers to reach 15 million in the first quarter.
Snap’s focus on direct response ads has been successful, with these types of ads contributing 75% of the company’s total ad revenue contribution for the first time in the quarter. Total active advertisers grew 60% from a year earlier, driven by Snap’s efforts to court small and medium-sized businesses.
However, analysts caution that economic uncertainty may lead to an ad spending shift to bigger rivals like Meta, which owns Facebook and Instagram. Minda Smiley of eMarketer noted that while Snap has had success with small businesses, it faces intense competition in the market.
Snap reported increased daily active users of 9% to 460 million and beat estimates of 458.3 million. The company also trimmed its full-year forecast for adjusted operating expenses to $2.65 billion to $2.70 billion.
Source: https://finance.yahoo.com/news/snap-shelves-quarterly-forecast-economic-201701330.html