Snap stock tanks 30% on Q4 earnings

Snap Inc (NYSE: SNAP) is crashing in extended hours on Tuesday after reporting disappointing revenue for its fiscal fourth quarter related partially to the ongoing Israel-Hamas war.

Snap stock up on solid guidance

The stock is being punished also because its management issued muted guidance for the future. Snap now expects revenue to fall between $1.095 billion and $1.135 billion in its current financial quarter.

Analysts, in comparison, were at $1.117 billion. Evan Spiegel – the chief executive of Snap Inc said in a press release today:

Snapchat enhances relationships with friends, family, and the world, and this unique value proposition has provided a strong foundation to build our business for long-term growth.

Earlier this week, the social media giant announced plans of lowering its headcount by about 10% as Invezz reported here. Snap stock is up nearly 15% versus its year-to-date low at writing.

Watch here: https://www.youtube.com/embed/419xGfRpwb0?feature=oembed

Notable figures in Snap Q4 earnings release

• Lost $248.2 million versus the year-ago $288.5 million
• Per-share loss also narrowed from 18 cents to 15 cents
• Adjusted EPS printed at 8 cents as per the earnings report
• Revenue jumped 5.0% year-over-year to $1.36 billion
• Consensus was 6 cents a share on $1.38 billion in revenue
• Ended the quarter with 414 million DAUs – better than expected

The New York listed firm added 2.0 million new subscribers to Snapchat+ in Q4. The premium service now has 7.0 million subscribers in total. CEO Spiegel also said on Tuesday:

We are encouraged by the progress we are making with our ad platform and the improved results we are delivering for many of our advertising partners.

What else was noteworthy in the earnings report?

Snap Inc generated $3.29 in average revenue per user in its fourth quarter – also shy of estimates.

The social media giant expects a continued increase in daily active users to 420 million in its current quarter versus 419.3 million expected. Its letter to shareholders reads:

We begin 2024 focused on three initiatives we believe are essential for Snapchat’s long-term success. We are continuing to evolve our ML models … we are working to unify the content experience across Spotlight and Stories … we are shifting more of our focus toward user growth and deepening engagement.

Snap, however, forecasts EBIT loss on an adjusted basis of up to $95 million in Q1 – well above $21.9 million that analysts had forecast. Wall Street currently has a consensus “hold” rating on Snap stock.

If there's one stock I wanna be short on for ER it's going to be $SNAP.

I don't believe in the business model + $META clears the social media industry.

It's likely I sell some call credit spreads for next week.

The IV will be juiced per usual on this ticker for ER.

— Rocky B 🥊 (@RockyBTrades) February 1, 2024

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