Revenue sharing to cut $30m off Snapchat’s 2017 ad revenue forecast

REUTERS/Lucas Jackson/File Photo

REUTERS – The 2017 advertising revenue forecast for Snap Inc’s Snapchat has been trimmed by $30 million due to higher than expected revenue sharing with its partners, digital marketing firm eMarketer said in its latest ad spending forecast on Tuesday.

While that still represents growth of more than 157% from last year, it is smaller than eMarketer’s prior forecast in September, which had predicted more than $800 million. Snap Inc disclosed the revenue sharing details in its SEC filing ahead of this month’s initial public offering.

Snap depends on advertising dollars for the bulk of its overall revenue. The US digital advertising market is expected to reach $83 billion, an increase of nearly 16% from last year.

Following a surge in its stock price in its first two days of public trading, when it traded as high as $27 a share on the New York Stock Exchange, Snap’s stock price tumbled in the second week, and is now around $21 a share, as investor concerns about slowing user growth and a lack of profit persist.

Facebook’s share of the US digital ad market is likely to increase to nearly 20% this year and Google will still command nearly 41%, eMarketer projected.

On the other end of the spectrum, eMarketer forecasts more trouble for Twitter, which has been grappling with stagnant user growth. Its US ad revenue will decline by 4.7% to $1.3 billion, and Twitter’s market share of the US digital ad market is expected to drop to 1.6% in 2017 from 1.9% last year.

(Reporting by Tim Baysinger in New York; Editing by Matthew Lewis)

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