American social media giant Snap Inc suffered huge losses in the stock market on Thursday as the company posted lesser-than-expected revenue growth during the third quarter of the current financial year. The stocks of Snap Inc witnessed its value plummeting by nearly 25 percent.
Snap Inc based in Santa Monica, California is one of the first companies from the online advertisement and social media market to post their financial results for the third quarter. According to the quarter numbers released on Thursday, the company revenue only grew at a meager rate of 6 percent when compared to previous 3rd Quarter financials.
This is also the first time since 2017 Snap Inc has posted single-digit revenue growth in a quarter. The social media company which owns the popular app, Snapchat, debuted in the public market in 2017 and since then the company has been able to achieve double digit growth without any stoppage.
Net Loss of the social media company also ballooned by 400% to a whopping 360 million dollars. The majority of the increase in the net loss is attributed to the restructuring charges incurred by the firm. Reports suggest that the firm had to spend somewhere near 155 million dollars to complete the restructuring of the business organization.
In August 2022, the top management of Snap Inc decided to lay off nearly 20 percent of its entire workforce as part of a major restructuring plan. At that time the company had more than 6000 employees working under its payroll. The severance package and other expenses related to the layoff represent a major portion of the restructuring charges.
In a letter to Investors, the company stated that the third quarter growth decelerated due to macroeconomic conditions of the global economy. Problems with the implementation of policy changes to the social media platforms owned by the company also impacted the growth prospects of the company.
The emergence of new social media platforms based in various parts of the world also increased competition in the advertisement market. This had a huge impact on the revenue from advertisements. All social media platforms and their parent companies depend upon advertising revenue to run the business.
Snap Inc also stated that it will not release any forecasts for quarterly financial results of the fourth quarter as the economic conditions continue to stay highly unstable.