SNAP Falls 30% on Bigger-Than-Expected First-Quarter Loss From

©Reuters. Snap (SNAP) stock plunges 30% after forecasting a bigger-than-expected loss for the first quarter

(Updated Feb 7, 2024 6:28am EST)

Snap Inc .’s (NYSE:) plunged 31% in premarket trading on Wednesday after the social media company missed fourth-quarter revenue expectations and forecast a larger-than-expected EBITDA loss for the quarter of March.

For the fourth quarter, the social media company reported adjusted earnings per share (EPS) of 8 cents, compared to 14 cents in the same period a year ago and the 6.4 cents analysts expected. Revenue came in at $1.36 billion, up 4.7% year-over-year, but below consensus estimates of $1.38 billion.

The company’s revenue in the North America region was $899.5 million, up 2.2% year-over-year and above the expected $875.9 million.

Adjusted EBITDA was reported at $159.1 million, down 32% year-over-year and better than the $111.8 million expected.

Snap reported 414 million daily active users (DAU) for the quarter, up 10% from the same period a year ago and compared to the consensus of 411.59 million. Average revenue per user fell 5.2% year over year to $3.29 and missed expectations of $3.33.

The company’s free cash flow for the quarter rose 41% from last year to $110.9 million, while analysts were guiding for $82 million.

For the fiscal first quarter, Snap expects revenue of $1.10 billion to $1.14 billion, compared to the consensus projection of $1.11 billion. The adjusted EBITDA loss is expected to be between $55 million and $95 million, significantly above the estimated $32.7 million.

Snap forecasts 420 million DAUs in the first quarter, exceeding the 418.55 million expected.

“We estimate that the onset of conflict in the Middle East was a headwind to year-over-year growth by approximately 2 percentage points in the fourth quarter,” the company said in the note.

Analysts at Evercore ISI noted in a report: “A learning. When a company announces a 10% RIF the day before its EPS release, there’s a good chance the EPS release will be negative,” referring to Snap’s announcement regarding job cuts.

Analysts continue to prefer PINs to SNAPs. With the former, the valuation is simpler, the improvements in execution seem more tangible, and the partnership with Amazon provides a clearer catalyst. That said, they are encouraged to see strong Spotlight engagement trends (time spent up 175% y/y) and solid overall growth in total time spent watching content.”

Analysts at Stephens reiterated their overweight rating on CMG after earnings. In their preview of the restaurant chain’s results, they said the company appears one of the “best positioned to deliver an advantage to same-store sales and/or EBITDA and EPS.”

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