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Actions in Break (BREAK) plunged on Wednesday after the social media platform reported an adjusted fourth-quarter profit that beat estimates, while revenue missed Wall Street targets. The company plans bigger investments for Snap stock amid tough competition for consumer usage.
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Snap reported fourth-quarter financial results after the market closed on Tuesday. About him stock market today, Snap shares plummeted 30.4% to 12.14 in early trading. The company owns and operates the social media app Snapchat.
Snap faces fierce competition from Metaplatforms (GOAL), TikTok and Alphabet‘s (GOOGLE) fast-growing YouTube short video services.
Snap’s daily active user growth slows
In the December quarter, Snap added 8 million daily active users versus estimates of 6 million. But Snap added 12 million daily active users in the December 2022 quarter.
In North America, daily active users fell by one million in the fourth quarter from the September quarter. The company ended 2023 with 414 million daily active users, 10% more than the previous year.
Snap told analysts it expects to add 6 million daily active users in the current quarter, which ends March 31.
For the first quarter of 2024, Snap forecast an EBITDA (earnings before interest, taxes, depreciation and amortization) loss in a range of $55 million to $95 million, well above estimates for an EBITDA loss of $25 million. of dollars. Snap plans greater investments to improve consumer engagement.
“Management cited ongoing investments with the expectation of driving improved engagement and profitability over time,” TD Cowen analyst John Blackledge said in a report. “Management also expects higher time-related marketing expenses in the first quarter.”
Snap reported fourth-quarter adjusted earnings per share of 8 cents, down from 14 cents in the same period a year earlier. Analysts had forecast an adjusted profit of 6 cents per share.
In the fourth quarter, Snap’s revenue rose 5% to $1.36 billion, missing estimates of $1.38 billion.
Snap Stock Technical Ratings
The social media company’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, amounted to $159.1 million. Analysts had estimated fourth-quarter EBITDA of $110.3 million.
In the current March quarter, Snap forecast revenue in a range of $1.095 billion to $1.135 billion versus estimates of $1.12 billion. At the midpoint of guidance, Snap forecast $1.115 billion, below views.
Snap still gets the lion’s share of digital advertising. Its fledgling subscription service, Snapchat+, had 7 million subscribers as of December 12, 2023, and 5 million as of September 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 Check.
On Monday, Snap said it plans to cut 10% of its workforce in 2024 as part of a restructuring plan. Snap had approximately 5,300 employees in the third quarter of last year.
In August 2022, Snap cut 20% of its workforce.
Follow Reinhardt Krause on X, formerly Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
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