Snap Warns About Current-Quarter Sales as it Tries to Boost Ad Revenue

Snap (SNAP) shares plunged 19% in early trading on Wednesday after the parent of the Snapchat social media app gave weaker-than-expected current-quarter guidance as it works to boost advertising revenue.

Snap predicted that third-quarter sales would be in the range of $1.07 billion to $1.13 billion, “built on the assumption” it will have 405 million to 406 million daily active users (DAUs). Analysts had anticipated $1.13 billion in revenue and 406 million DAUs.

The company said its business “remains in a period of rapid transition as we work to improve our advertising platform.” It added that the outlook for future ad demand “remains limited" amid broader macroeconomic uncertainty.

In the second quarter, Snap slashed its losses by 10.6% as it cut costs. The company posted a loss of $377 million, or 2 cents per share, half of forecasts. Revenue fell almost 4% to $1.07 billion, but that also exceeded estimates.

DAUs jumped by 50 million, or 14%, to 397 million. Average revenue per user dropped 13.9% to $2.69. Both were more than expected.

Despite Wednesday's plunge, shares of Snap were still in positive territory for the year.