Snap stock falls on Q1 earnings miss, Pinterest posts weak Q2 outlook

Yahoo Finance Live anchors Julie Hyman and Ines Ferre discuss why Snap and Pinterest stocks are declining.

Video transcript

[AUDIO LOGO]

JULIE HYMAN: Let's take a look at some of today's market movers, starting on the social media scene. Snap and Pinterest taking a dive following the latest quarter. Snap reporting a miss on revenue as it struggles amid a steep decline in advertiser spending, this as Pinterest provides a disappointing outlook for the second quarter.

We're going to talk more about this with an analyst in just a bit. But it is an interesting disconnected, Ines, that we have Amazon on the one hand, Alphabet as well, some of the other bigger tech companies, Meta saying that advertising's doing OK. And it doesn't seem to be the case for Snap in particular.

INES FERRE: Yeah, that's right, especially because Snap had also invested in its advertising, the way it also shows advertising. So that's not expected to sort of come out in results, in more positive results until later on. So that's part of why you saw the disappointment here.

But as far as Pinterest is concerned, what was interesting was their monthly active users, that was up 7%. And something that I found interesting from their earnings call as well, Gen Z users are finding value in engaging with the full breadth of content, including video. So video also going to start taking a more prominent role when it comes to the discovery platform.

JULIE HYMAN: Yeah. I mean, I think both of these companies are, but more so Snap, as you said, is trying to do that ad transition. And then when you layer the macro on on top of that, that seems to be what's causing these particular challenges, right, is that the backdrop is not great right now for it. So that really was in focus for Snap, I think, in terms of what analysts were talking about.

Morgan Stanley, for example, saying the company is early in its migration to build that more of a performance advertising business. And that creates high execution risk.

INES FERRE: Yeah, and this is something-- the macro picture is something that Snap had been talking about since last year, a deteriorating basically macro backdrop. Their average revenue per user, that fell to $2.58 from $3.20 year-over-year.

And so that's very significant because that's one of the metrics, ARPU, that analysts take great note in. So that falling also weighing on the stock as well.

JULIE HYMAN: Yeah. And, again, we're going to keep talking about this with Rohit Kulkarni in just a moment try to get to the bottom of what's going on with these two companies and the bigger ad picture.