Snap's stock price drops more than 20% on poor outlook

• Snap forecasted that its third-quarter revenue would be between $1.335 billion and $1.375 billion, missing analysts' expectations of $1.36 billion.
• Evan Spiegel, Snap CEO, announced that the community grew to more than 850 million monthly active users in Q2 and has over 11 million Snapchat+ subscribers.
• Earlier this week, Meta's shares surged 7% after the company released its latest financial results and announced a better-than-anticipated outlook for the current quarter.

On Thursday, shares of the company fell more than 20% in extended trading after the company released third-quarter guidance that fell short of analyst expectations.

Here are the results:

• According to LSEG, the earnings per share were $0.02 adjusted, which is lower than the expected $0.02 per share.
• Revenue: $1.24 billion vs. $1.25 billion expected, according to LSEG
• According to StreetAccount, the number of global daily active users was 432 million, slightly higher than the expected 431.1 million.
• According to StreetAccount, the global average revenue per user was $2.86, which is lower than the expected $2.91.

Snap forecasts third-quarter revenue to be between $1.335 billion and $1.375 billion, or $1.355 billion in the middle of the range. Analysts predicted $1.36 billion. The company anticipates adjusted earnings of $70 million to $100 million, which is below the $110 million average analyst estimate, according to StreetAccount.

The company announced in an investor letter that it is making incremental investments in areas such as infrastructure, personnel, and marketing, while also acknowledging the growing legal and regulatory burden on its cost structure.

Sales in the second quarter increased by 16% compared to the previous year, reaching $1.28 billion. Snap stated that the decline in sales was due to a weaker advertising environment for certain consumer discretionary sectors. The number of monthly active users increased to 850 million from 800 million in February.

"In Q2, our community grew to more than 850 million monthly active users, with over 11 million Snapchat+ subscribers, as stated by Snap CEO Evan Spiegel. Additionally, our advertising platform experienced significant growth, with active advertisers more than doubling year-over-year."

In 2022, Snap launched its Snapchat+ subscription service to expand beyond online advertising and announced earlier this year that it had reached an annualized revenue run rate of $249 million in 2023.

On Wednesday, Meta reported second-quarter earnings that surpassed analysts' expectations, with revenue increasing 22% year-over-year to $39.07 billion. As a result, Meta shares experienced a 5% increase following the release of the company's latest financial results and the disclosure of a better-than-anticipated outlook for the current period.

Pinterest's stock price dropped this week after the company's earnings and third-quarter forecasts did not meet analyst expectations. During an earnings call, CFO Julia Brau Donnelly revealed that Pinterest's food and beverage advertisers, who are facing broader challenges in their industry, contributed to the softness in the company's performance.

Alphabet reported that its Google ad business grew 11% to $64.6 billion in the second quarter, but YouTube advertising sales were lower than expected at $8.66 billion.

WATCH: Snap CEO Evan Spiegel: We offer social connection without social comparison