OPINION: Snap’s life as a high-growth young tech stock is over, writes columnist tpoletti. And its future doesn't look good.
Snap Inc.’s life as a high-growth young tech stock is over, and its rivals are about to show how much of that change is about Snapchat.
Brand advertising, one of Snap’s biggest revenue streams, was “significantly reduced” in the quarter and ad partners “are just managing their spend very cautiously so that they can react quickly to any changes in the environment,” Spiegel added. He also noted that Snap’s direct response business grew in the quarter.
Snapchat’s ad business could be especially ill-suited to the current environment, though. LightShed Partners analyst Rich Greenfeld contends that Spiegel’s comments about direct response ads actually bodes well for Meta, which he believes will show its earnings power this year as Snap and others struggle.
Snap finished 2022 with negative free cash flow, though. Google and Facebook are about to drop a lot of cash and earnings on the table with their reports this week, even with revenue-growth concerns. That will show just how big a gap exists with Snap, which will have a lot harder time dealing with TikTok and the rest of the industry’s issues, especially while predicting sequential user growth of roughly 2%.
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