Snap stock fell 30% after missing revenue and weak guidance

Snap stock fell 30% after missing revenue and weak guidance

Snap is headed for one of its worst days on the market since its debut in 2017. Its two biggest single-day drops were a 43% drop in May 2022 and a 39% drop two months later.

Snap reported revenue of $1.36 billion for the quarter, just below the $1.38 billion that analysts had expected, according to LSEG, formerly known as Refinitiv. The company reported adjusted earnings per share of 8 cents versus the 6 cents analysts had expected.

These results mark the sixth consecutive quarter in which the company has seen single-digit growth or decline in sales. Snap expected its growth to gain momentum in the first quarter, but not as quickly as analysts expected.

Analysts at Morgan Stanley maintained their low rating on Snap and lowered their price target to $11 in a note to investors on Wednesday, writing that the company’s advertising turnaround was slower than expected and its engagement was weak. They noted that strong ad improvements and impression growth on Meta and Amazon could represent other headwinds to Snap’s ad revenue.

“While we are encouraged by the progress we are making in our advertising platform and the improved results we are delivering for many of our advertising partners, we appreciate that the onset of conflict in the Middle East has been a headwind year over year to growth of approximately 2 percentage points in the fourth quarter,” Snap said in a letter to investors.

Barclays analysts remained upbeat after earnings, maintaining an overweight rating and price target of $15 per share and writing that “buying the dip looks concerning but is likely the right thing to do here.”

“Looking back, Q4 was a mixed bag, but the acceleration in Q1 gives us confidence that things are getting back on track,” the analysts wrote. “SNAP has been looking like META for about five quarters, on the cusp of some great recovery trends but with few thesis believers.”

JPMorgan analysts reiterated their down rating on Snap shares while raising their price target from $9 to $11 based on a 2025 revenue forecast of about $5.9 billion, writing that “stronger growth in engagement and ad platform” is needed in light of the “stuttering recovery.” ” is reflected in the company’s fourth-quarter earnings and first-quarter forecasts.

“In the meantime, extreme volatility in Snap stock will keep many at arm’s length, and the company will need to continue to demonstrate its ability to improve execution,” they wrote.

— CNBC’s Michael Bloom and Jonathan Vanian contributed to this report.

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(Tags for translation) Snap Inc

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