After falling from the mid $25 range to $15 in May 2022, Snap Inc. (SNAP) fell again to $10 in July. It fell again to $7.76 on Oct. 21 after posting weak results. SNAP stock has major business weaknesses ahead. Uncertainty is higher than ever. The company did not issue guidance for the fourth quarter.
Snap posted its lowest sales rate as a public company. It relied too much on less-proven advertising. Competition is rising quickly. Social networking companies are chasing fewer advertising dollars.
Snap posted revenue growing by 6% to $1.13 billion. Losses worsened, rising to $360 million, compared to $72 million in losses last year. The company tried to prevent a sell-off by announcing a stock buyback of up to $500 million.
Snap’s uncertain outlook is potentially unique. Meta Platforms (META) might report a stabilization in advertising customers. Still, the company is investing heavily in the metaverse. The project is unproven. Its core product has around 250,000 users, falling short of the 500,000 targets. Meta recently hiked prices for the Oculus headset. This will weaken demand.
Pinterest (PINS), which is struggling to grow, might post weak results. Unity (U), a gaming firm, is a possible metaverse buyout target. Both stocks might continue underperforming for now.
