Despite laying off 20% of its workforce, Snap reports underwhelming Q3 earnings

Snap, the parent company of social media platform Snapchat, reported underwhelming third-quarter earnings on Thursday, with less than 6% revenue growth. Shares of Snap fell 0.64% to $10.79, later plummeting to $7.89 after the market’s closing bell—a 26% drop.

Analysts at Refinitiv were not far off in their estimates of revenue, with Snap reporting $1.13 billion versus $1.14 billion. Snap also saw a significant net loss of $360 million, a massive increase from a $72 million loss in Q3 2021. The company took a hit in part due to its restructuring plan back in August, when Snap laid off 20% of its employees.  

Founder and CEO Evan Spiegel said that despite continuing to face significant headwinds this quarter, the business is maintaining its focus on growing community, diversifying revenue growth, and investing in augmented reality.

“In the U.S. and globally, viewership is up. . . . That means our overall opportunity is expanding,” Spiegel said during the company’s quarterly earnings call. “There are going to be some unique opportunities with things like Spotlight, for example, where smaller advertisers can experiment with submitting content. . . . They may want to turn into a direct-response advertising unit and manage that through our platform.” Snap gave no guidance for the fourth quarter.

Marketing intelligence news service StreetAccount forecasted the platform had 358.2 million global daily active users (DAUs), while Snap reported 363 million, up 19% from the previous year. With a border dip in digital advertisement spending, Snap’s average revenue per user dropped 11% to $3.11. Snap also announced board authorization of a massive stock repurchase program of up to $500 million.