Snap Falls After Warning ‘Headwinds’ Poised to Hurt Ad Sales-OxBig News Network

(Bloomberg) — Snap Inc. narrowly beat analysts’ estimates for first-quarter revenue but declined to issue a sales forecast for the current period, saying it’s navigating macroeconomic “headwinds” for its advertising business. 

While its revenue continues to grow in the second quarter, Snap said economic volatility “may impact advertising demand more broadly,” contributing to its decision to withhold sales projections. Shares fell more than 7% in extended trading.

“We believe it is prudent to continue to balance our level of investment with realized revenue growth,” Snap wrote in a letter to shareholders. 

Revenue for the quarter ended March 31 was $1.36 billion, it said in a statement Tuesday, slightly above the $1.35 billion average analyst estimate compiled by Bloomberg. 

The company also scaled back its full-year target for adjusted operating expenses to $2.65 billion to $2.7 billion, a decrease of $50 million at the midpoint of the range. It also lowered its range for expected stock compensation. 

Total number of advertisers for the quarter grew 60% over the same period a year earlier, and direct response advertising — promotions focused on enticing users to do something, like visit a website or buy a product — made up 75% of Snap’s advertising revenue for the quarter, an all-time high. The company has been working to emphasize hosting those kinds of ads, which make it easier to attribute a success to Snap. 

The company’s subscription product, Snapchat , now has 15 million paid subscribers, up 59% from one year prior. Overall, the company has 900 million monthly active users, edging closer to its goal of 1 billion.

Snap is one of many companies warning about how difficult it is to do business alongside Donald Trump’s ongoing trade war, during which the administration has levied widespread tariffs on goods from virtually all of the US’s largest trading partners. Porsche AG warned of shrinking profit margins, sending it shares tumbling. JetBlue Airways Corp. pulled its full-year outlook Tuesday, and General Motors Co. also withdrew its earnings guidance. 

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