Shares in social media firm Snap Inc. plunged as much as 30% in after-hours trading following the company’s release of muted fourth-quarter results.
The SnapChat parent’s numbers were roughly in line with Wall Street analysts’ expectations, making the stock movement all the more intriguing. Adjusted earnings of 8 cents a share nipped forecasts for 6 cents, while revenue of $1.36 billion fell just shy of the consensus of $1.38 billion. The financials, and a 10% year-over-year uptick in daily active users to 414 million, were not enough to persuade anxious investors in the wake of Facebook and Instagram parent Meta Platforms’ blockbuster quarter.
Shares in Snap fell as much as 30% after hours, settling close to $12. Prior to the plunge after the bell, Snap stock had been regaining ground, rising 4% before the earnings report to finish the trading day at $17.46, its highest level in nearly two years. The pattern of Snap’s quarterly earnings coming out and the stock immediately plummeting has repeated itself in recent months.
In its earnings release, Snap said it expected to reach 420 million daily active users by the end of the current quarter on March 31. It also expects first-quarter revenue to rise by 11% to 15% compared with the year-earlier period, reaching between $1.095 billion and $1.135 billion.
The entire social media sector undergoes a reappraisal amid larger turbulence in digital advertising and questions about regulation and scale. TikTok’s steady rise has squeezed many social media players. Twitter, a longtime publicly traded part of the industry, has been privately held since Elon Musk’s $44 billion takeover in the fall of 2022, with headlines about its erratic path since the acquisition only adding to the froth.
Snap had been seeking to assure investors that it is continuing its efforts to rein in costs. On Monday, Snap said it plans to lay off 10% of its global workforce, or about 500 employees.
MORE to come …
