Snap fell 14% after it reported first-quarter earnings and said it wasn’t sharing second-quarter guidance.
Trade restrictions and changes to the de minimis exception are hurting Snap.
The company is struggling with inconsistent earnings and slowing user growth in key markets.
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.
