- Snap tumbled 11% on Wednesday after posting weak quarterly results.
- The social media company also warned first-quarter revenue could drop up to 10% compared to the year prior.
Snap stock plunged 11% on Wednesday after the social media company posted it slowest rate of quarterly growth ever.
The Snapchat parent's fourth-quarter revenue of $1.3 billion was essentially flat from the year before and below analysts' estimates of $1.31 billion. Snap recorded 373 million global daily active users versus estimates of 375.3 million.
A lot companies had to slash digital advertising budgets amid a slowing economy last year, resulting in big hits for social media platforms like Snap.
"It seems like advertising demand hasn't really improved, but it hasn't gotten significantly worse either," Snap CEO Evan Spiegel said on the Tuesday earnings call. "In general it seems like our partners are just managing their spend very cautiously so that they can react quickly to any changes in the environment."
Snap also estimated first-quarter revenue could drop between 2% and 10% compared to the previous year.
Jefferies slashed Snap's 2023 revenue estimates by 2% and assumed 0% growth, per a note to clients on Wednesday.
"We are concerned that Snap's issues are intensifying, as recent ad platform changes further pressure revenue growth and depth of engagement on friend stories again decreasing year over year," analyst James Heaney wrote.
Despite recent cost savings initiatives at the company, he predicted intensifying margin pressures for Snap.
Shares of Snap plunged 67% in the past year. With a broader rally in the tech sector, the stock has spiked 17% in the past month and recouped some of its losses.