The Yahoo Finance Live show discusses the decline of Snap stock on Q1 earnings amid ad spend slowdown and economic headwinds.
Video Transcript
– And taking a look at some individual shares. You have shares of Snap sinking on the day. That stock finishing down 17%. This comes after a miss on revenue in the company’s first quarter earnings. Snap and other media rivals have been struggling during a sector-wide decline in ad spending, different than what you saw with, say, heavyweight Meta.
Yeah, and, you know, it’s been interesting to see that Meta, as I mentioned, Communication Services up on the week. I talked to ROTH MKM managing director, Rohit Kulkarni earlier today. He reacted to the headwinds in companies like Snap, that they’re facing in terms of ad revenue and the sort of divide between large and small.
ROHIT KULKARNI: I think when ad budgets stop growing, advertisers try to gravitate towards tried and tested large platforms, Google, Facebook. Those are the ones. And smaller companies tend to have a more experimental budgets that disappear. Snap and Pinterest probably are going to face more headwinds than what larger companies are facing right now. So that’s the issue.
– Yeah, the issue here between the large and small. It’s been pretty stark.
– It definitely has. And then you think even further with Snapchat and their AI difference between the large and small there as well, right? You’re talking about Google and Microsoft, who are clearly well ahead of what Snap is trying to do with AI really.
Generally speaking, I mean, Snap has this My AI product. They talked about it a little bit yesterday. But it’s still relatively unclear what that actually does for Snap as an entire business.
I did see some analysts still pointing out to potential growth in Snap Maps, maybe AR. So maybe Snap still getting into some of the other spaces that have been growth areas for tech. But the biggest thing about Snapchat has just been how do you continue to grow that revenue outside ads.
There was this part of Snap go back a couple of years ago where they wanted to sell products, right? They wanted to sell you a drone or something like that and get into maybe even get into headsets. They’ve sort of been all over the place as far as what the strategy is to regrow revenue. And it seems like that has not really been addressed to this point.
– Well, now they’re doing also a migration of their ad platform, where they’re changing how they measure the ad impressions and therefore how they sell the ads and so that happening with the backdrop of a tough ad environment. It’s been tricky and it’s something that Facebook did earlier and did it successfully. But it was rocky in the interim.
– Right. And speaking of products, I remember when Snap tried the glasses and those didn’t really. Those were just a fad.
– The spectacles, where they call the spectacles, as I recall.
– I forget exactly what they were called. Really cool factor, but that’s it.
– That’s it, exactly.
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