What happened

Shares of Snap (SNAP -0.72%) plunged 39% on Friday after the social media company's second-quarter financial results alarmed investors. 

So what

The parent company of Snapchat said its revenue rose 13% year over year to $1.1 billion. That represented a marked deceleration from the 38% growth Snap achieved in the first quarter. 

Worse still, Snap's losses widened. It produced a net loss of $422 million compared to a loss of $152 million in the year-ago quarter. 

Although its daily active users grew 18% to 347 million, Snap is finding it harder to monetize its platform. Its average revenue per user declined by 4% to $3.20. 

Apple's privacy-related changes to its mobile operating system have limited Snap's ability to collect data on its users. With its ad-targeting capabilities weakened, Snap's marketing tools are now less valuable to advertisers.

A slowing economy, lackluster e-commerce sales, and intensifying competition from TikTok and other social media competitors are adding to Snap's troubles. Still, Snap's poor results were disappointing even considering these challenges.

"We are not satisfied with the results we are delivering, regardless of the current headwinds," the company said in a letter to shareholders. 

Now what

Management sees more rough times ahead. Although Snap expects its daily active users to grow to 360 million in Q3, its revenue is on track to be roughly flat compared to the prior-year period. That would represent a further deceleration in Snap's once-torrid pace of expansion, and a troubling trend for investors.

Snap said the downturn will force it to prioritize cost-reduction and productivity initiatives, including putting the brakes on hiring. "It is clear that our rate of revenue growth has slowed considerably and we must adapt our investment strategy," the company said.