Shares of Snap Inc (NYSE: SNAP) tanked more than 15% in extended trading after the social media company reported its worst revenue growth in a quarter ever.
Pro reacts to Snap’s earnings print
The stock is being punished also because it swung to a loss in its recent quarter on a continued slowdown in advertising spend and refused to offer guidance for the future. Reacting to the earnings print, Third Bridge’s Scott Kessler said on Yahoo Finance Live:
They did signal the Q1 has started off slowly; year-to-date revenues are down 7.0% in Q1. If continued, that would translate to a revenue decline, significantly below expectations for an increase actually.
Snap stock is still up more than 10% for the year.
Here’s what Snap needs to do
Free cash in Q4 was roughly cut in half year-on-year to $78 million, as per the earnings press release. Snap now expects to break even on an adjusted EBITDA basis in the current quarter. According to Kessler:
One of the things they clearly need to do is pivot the business from an ad model focused on big advertisers and brand advertising to more oriented around performance advertising. That’s not something you can do over a couple of quarters.
Wall Street currently has a consensus “hold” rating on the Snap stock.
Snap stock down on Q4 financial results
Lost $288.5 million that translates to 18 cents a share
In comparison, it had $23 million of net income last year
Revenue remained unchanged year-on-year at $1.3 billion
DAUs increased 17% to 375 million – in line with estimates
ARPU of $3.47 missed analysts’ expectations by 2 cents
Snap was the one to kick off tech layoffs last year, cutting more than 6,000 of its employees in August (read more).