Despite exceeding market expectations in the first quarter, social media site Snap withdrew its revenue guidance for the second quarter, citing economic fluctuations caused by tariff policies that have impacted advertising demand.
On April 30, reports indicated that Snap's first-quarter revenue slightly surpassed analyst expectations, but the company refused to provide a sales forecast for the second quarter, stating that it is facing &#34;headwinds&#34; from the macroeconomic environment affecting its advertising business.
Following the announcement, Snap's stock price plummeted by as much as 16% in after-hours trading, currently down over 14%.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/c6635346-6d7c-458e-abcf-18259c35863b.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/c6635346-6d7c-458e-abcf-18259c35863b.png"/>
Snap's Chief Financial Officer Derek Andersen stated during the earnings call with investors that some of Snap's advertisers are reducing spending due to the Trump administration's modification of the tariff exemption rules for small packages under $800. Andersen noted that the company will continue to monitor the situation very cautiously.
Reports indicate that Snap is just one of many companies warning about the negative impacts of the trade war. Against the backdrop of the Trump trade war, the U.S. has imposed widespread tariffs on goods from nearly all major trading partners, making the business environment increasingly difficult. Porsche warned of shrinking profit margins, leading to a sharp drop in its stock price; JetBlue Airways withdrew its full-year outlook; General Motors also retracted its earnings guidance.
<h2>Why is Snap so sensitive to weakness in the advertising market?</h2>
As mentioned above, Snap stated that the Trump administration's modification of small package tariff rules is affecting its advertising business. Google also predicted similar impacts from these changes last week. Meta Platforms is expected to confirm the impact on its advertising business related to the modification of small package tariff rules when it releases its report on Wednesday.
The U.S. exemption from tariffs for small packages under $800 allows low-priced goods on platforms like Temu and Shein to be exempt from tariffs. However, according to tech media the Information, with the modification of this rule, the end of the low-price era for Temu and Shein products will not only impact discount shoppers but also hit digital advertising companies.
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Among Snap, Google, and Meta, Snap is the most sensitive to any weakness in the advertising market simply because it is not seen as an essential advertising platform. If marketers need to cut spending, they are likely to abandon Snap before other digital channels.
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Reports indicate that although the changes to the small package tax exemption will not take effect until Friday, Temu and Shein have already raised their prices. Whether these two online shopping services can continue to thrive after the price increases is a big question, but it makes sense for them to cut marketing costs. After all, when prices nearly double, the advertising value of emphasizing low prices becomes less effective.
<h2>Snap's first-quarter performance exceeded expectations, but the outlook is uncertain</h2>
According to a statement released by Snap on April 29:
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The company's revenue in the first quarter was $1.36 billion, slightly above analysts' average expectation of $1.35 billion.
In the first quarter, the total number of advertisers increased by 60% year-on-year, with direct response ads (ads aimed at prompting users to visit websites or purchase products) accounting for 75% of Snap's advertising revenue, reaching a record high.
In the first quarter, Snap reported a net loss of $140 million, more than halving the loss compared to the same period last year.
Snap's subscription product Snapchat+ currently has 15 million paying users, a year-on-year increase of 59%. The company's monthly active users reached 900 million, moving closer to its goal of 1 billion users.
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It is worth noting that, in addition to refusing to provide guidance for second-quarter revenue, the company also lowered its full-year adjusted operating expense target, reducing the previous range of $2.65 billion to $2.7 billion by $50 million.
Andersen stated that this could impact the company's hiring plans for the remainder of the year, as approximately two-thirds of the company's annual adjusted operating expenses are &#34;personnel-related costs.&#34;

SNAP

Snap's revenue for the first quarter was $1.36 billion, slightly above the analysts' average expectation of $1.35 billion, but it declined to provide sales forecasts for the second quarter, stating that the company is facing "headwinds" from the macroeconomic environment affecting its advertising business. Chief Financial Officer Derek Andersen stated that some of Snap's advertisers are reducing their spending

- Snap reported first-quarter revenue of $1.36 billion, slightly exceeding analyst expectations, but withdrew its second-quarter revenue guidance due to economic fluctuations impacting advertising demand.  
- The company's CFO noted that changes in tariff exemptions for low-value packages are causing advertisers to reduce spending, reflecting broader challenges faced by firms amid the ongoing trade war.  
- Following the announcement, Snap's stock fell over 14%, highlighting its sensitivity to advertising market weaknesses compared to competitors like Google and Meta.

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Tariff impact on advertising, social media site Snap withdraws second-quarter revenue guidance, stock price plummets in after-hours trading