Social media platform Snap (SNAP) reported fourth-quarter adjusted profit that topped estimates while revenue missed Wall Street targets. Snap stock plunged as revenue guidance also came in light amid stiff competition for consumer usage.
On the stock market today, Snap stock plunged more than 30% to 12 in extended trading. The company owns and operates the Snapchat social media app.
Snap faces fierce competition from Meta Platforms (META), TikTok and Alphabet's (GOOGL) fast-growing YouTube short-form video services.
In the December quarter, Snap added 8 million daily active users vs. estimates of 6 million. Snap added 12 million daily active users in the December 2022 quarter. The company ended 2023 with 414 million active daily users, up 10% from a year earlier.
Snap reported adjusted earnings per share of 8 cents, vs. 14 cents in the year-earlier period. Analysts had predicted adjusted profit of 6 cents per share.
In the fourth quarter, Snap revenue rose 5% to $1.36 billion, missing estimates of $1.38 billion.
The social media firm's September-quarter revenue also rose 5%. Sales had declined in the first two quarters of 2023.
Adjusted earnings before interest, taxes, depreciation and amortization, known as EBITDA, came in at $159.1 million. Analysts had estimated Q4 EBITDA of $110.3 million.
Snap Stock Technical Ratings:
In the current March quarter, Snap forecast revenue in a range of $1.095 billion to $1.135 billion vs. estimates of $1.12 billion. At the midpoint of guidance, Snap forecast $1.115 billion, below views.
Snap still garners most advertising from digital advertising. Its fledgling subscription service, Snapchat+, had 7 million subscribers as of Dec. 12, 2023, and 5 million as of Sept. 30.
Snap stock has forged an entry point of 17.90. The stock has an IBD Relative Strength Rating of 97 out of 99, according to IBD Stock Checkup.
On Monday, Snap said it plans to cut 10% of its workforce in 2024 as part of a restructuring plan. Snap had roughly 5,300 employees as of Q3 last year.
In August 2022, Snap slashed 20% of its workforce.
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