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Snap shares fall after fourth-quarter results

Snap shares fall after fourth-quarter results

Snap's stock fell more than 30 percent in after-hours trading Tuesday after falling short of analysts' expectations, even though the company reported a 5 percent increase in revenue, its second consecutive quarter of growth.

Revenue for the three months ended Dec. 31 was $1.36 billion, up from $1.3 billion a year earlier, but below Wall Street's estimate of $1.38 billion for Snapchat's parent company. Net loss in the fourth quarter narrowed to $248 million from $288 million a year earlier.

“2023 was an important year for Snap, as we continue to focus on adding value to our community while evolving our business for long-term growth,” the company's Chief Executive Evan Spiegel said in a letter to investors.

On Monday, Snap laid off more than 500 employees, or about 10 percent of its global workforce, part of a larger wave of targeted cuts by tech companies this year.

Mr. Spiegel said in the letter, “While this decision was painful, and we will miss our friends and colleagues, we believe these changes are necessary to achieve our long-term goals and manage expenses. “

Despite its growth and continued boom in the digital advertising market, Snap still faces a challenging advertising market, and reports from other tech companies have been mixed. Last week, Meta reported that its profits more than tripled, and it issued its first dividend. But Alphabet reported slow growth in ad sales, and its search revenue and profit margins fell short of Wall Street expectations.

Over the past year, Snap has been focusing its business on direct response ads, which let customers click through to buy a product. Mr. Spiegel said sales declined during the first half of the year because of advertising-platform changes. But, he said, it leaves Snap's advertising business better positioned for long-term growth.

However, analysts have said the app may struggle to find ground with that model, as users primarily use the app to message each other and don't always see ads.

The company on Tuesday also pointed to the success of new services like Snapchat Plus, a subscription service available from July 2022 that costs $3.99 a month, which now has more than seven million paid users. And it says Snap Star, a creator program that launched in early 2022, has attracted many content creators to the platform with the promise of earning money from ads posted alongside their public Stories.

Snap's user base continued to grow. The total number of daily active users in the fourth quarter was 414 million, up 10 percent from a year earlier. Monthly active users, usually disclosed once a year, increased by 8 percent and surpassed 800 million.

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