Technology
Wednesday, February 7th, 2024 3:46 pm EDT
Key Points
- Snap shares plummeted by 30% in Wednesday morning trading following the company’s fiscal fourth-quarter earnings report, which missed revenue estimates and provided light guidance.
- The company is struggling to rebound from the challenging 2022 advertising market, contrasting with the performance of competitors like Meta.
- Snap reported revenue of $1.36 billion for the quarter, slightly below analyst expectations, marking its sixth consecutive quarter of single-digit growth or sales declines.
Snap Inc. faced a significant setback as its shares plummeted by 30% in Wednesday morning trading following its fiscal fourth-quarter earnings report, which missed revenue estimates and provided cautious guidance. The company’s struggles in rebounding from a challenging 2022 advertising market have set it apart from competitors like Meta. This decline marks one of Snap’s worst days on the market since its debut in 2017, with previous significant drops of 43% and 39% in May and July 2022, respectively. Despite reporting revenue of $1.36 billion for the quarter, slightly below analyst expectations, Snap managed to surpass anticipated adjusted earnings per share (EPS) of 8 cents versus the 6 cents forecasted. However, these results reflect Snap’s sixth consecutive quarter of single-digit growth or sales declines, raising concerns among investors. While Snap anticipates growth momentum in the first quarter, analysts remain cautious, with Morgan Stanley maintaining an underweight rating and lowering its price target to $11, citing slower-than-expected ad turnaround and weak engagement. On the other hand, Barclays analysts retained an optimistic outlook, maintaining an overweight rating and a $15 price target, likening Snap’s current situation to Meta’s position five quarters ago, indicating potential recovery trends. JPMorgan analysts reiterated their underweight rating but raised the price target to $11, emphasizing the need for stronger engagement and ad platform growth to navigate the choppy recovery evident in Snap’s earnings report and outlook. The company attributed part of its Q4 challenges to external factors like the conflict in the Middle East, underscoring the need for continued improvement in execution to regain investor confidence amidst extreme share price volatility.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/02/07/snap-stock-drops-30percent-after-revenue-miss-and-weak-guidance.html
