Snap’s stock has taken a series of beatings. Now, it’s another victim of President Donald Trump’s wave of trade restrictions.
On Tuesday, Snap plunged 14% after hours after the social media company reported first-quarter earnings. Revenue and user growth, an important metric for media companies, were roughly in line with expectations. But the company’s chief financial officer, Derek Andersen, made one remark that spooked investors.
“Given the uncertainty with respect to how macroeconomic conditions may evolve in the months ahead, and how this may impact advertising demand more broadly, we do not intend to share formal financial guidance for Q2,” Andersen said on the earnings call.
Tech companies like Amazon, Meta, and Snap get a lot of their business from Chinese advertisers trying to reach American shoppers. Tariffs and other trade restrictions make items expensive and less appealing for Chinese companies to advertise on US platforms.
The CFO also said there will be “headwinds” from changes to de minimis, a loophole that lets goods valued at less than $800 enter the US duty-free. As of May 2, de minimis shipments of China-made goods will no longer be allowed.
“We’ve heard from a subset of advertisers that their spending has been impacted by the changes to the de minimis exemption,” Andersen said.
In a post-earnings note, RBC Capital Markets analyst Brad Erickson called the results “challenging” and highlighted that the company won’t provide revenue guidance.
On Tuesday, CFRA analyst Angelo Zino wrote that while Snap’s investments in augmented reality and artificial intelligence have helped results, the absence of second-quarter guidance “is not sitting well with investors” and likely led to Tuesday’s share slide.
Zino added that smaller platforms like Snap are “potentially more vulnerable” to tariffs than larger competitors like Meta and Google.
The Snapchat owner has had its share of problems long before Trump’s tariffs. It faces stiff competition from Meta products and TikTok and has been posting inconsistent earnings results, sometimes falling short of Wall Street estimates for revenue. Over the past few years, investors have been wary of slowing user growth in important markets like North America and Europe and high spending on machine learning and call-to-action advertising.
Its stock is down close to 40% over the last year and it has lost 66% of its value since its 2017 initial public offering. Then valued between $20 billion and $25 billion, it was, at the time, the biggest IPO on a US exchange since Alibaba debuted in 2014 at a value of $168 billion.
Snap reported first-quarter revenue of $1.36 billion, a 14% increase compared to last year. It reported a net loss of $140 million, compared to a loss of $305 million in the year before. It reached 460 million daily active users, a 9% increase from last year.