S&P 500   5,088.80
DOW   39,131.53
QQQ   436.78
Warren Buffett uses his annual letter to warn about Wall Street and recount Berkshire's successes
It's Called "the Singularity" (Ad)
MarketBeat Week in Review – 2/19 - 2/23
Taiwan giant chipmaker TSMC opens first plant in Japan as part of key global expansion
AI Stock Caught Trading Under Secret Name (Ad)
A collection of the insights Warren Buffett offered in his annual letter Saturday
West Africa bloc lifts coup sanctions on Niger in a new push for dialogue to resolve tensions
6.5 Million Americans Are DESPERATE for This New Drug from One Tiny Company (Ad)
West Africa's ECOWAS bloc says it's lifting sanctions imposed on Niger over last year’s coup in a new push for dialogue
Macron booed by French farmers who blame him for not doing enough to support agriculture
S&P 500   5,088.80
DOW   39,131.53
QQQ   436.78
Warren Buffett uses his annual letter to warn about Wall Street and recount Berkshire's successes
It's Called "the Singularity" (Ad)
MarketBeat Week in Review – 2/19 - 2/23
Taiwan giant chipmaker TSMC opens first plant in Japan as part of key global expansion
AI Stock Caught Trading Under Secret Name (Ad)
A collection of the insights Warren Buffett offered in his annual letter Saturday
West Africa bloc lifts coup sanctions on Niger in a new push for dialogue to resolve tensions
6.5 Million Americans Are DESPERATE for This New Drug from One Tiny Company (Ad)
West Africa's ECOWAS bloc says it's lifting sanctions imposed on Niger over last year’s coup in a new push for dialogue
Macron booed by French farmers who blame him for not doing enough to support agriculture
S&P 500   5,088.80
DOW   39,131.53
QQQ   436.78
Warren Buffett uses his annual letter to warn about Wall Street and recount Berkshire's successes
It's Called "the Singularity" (Ad)
MarketBeat Week in Review – 2/19 - 2/23
Taiwan giant chipmaker TSMC opens first plant in Japan as part of key global expansion
AI Stock Caught Trading Under Secret Name (Ad)
A collection of the insights Warren Buffett offered in his annual letter Saturday
West Africa bloc lifts coup sanctions on Niger in a new push for dialogue to resolve tensions
6.5 Million Americans Are DESPERATE for This New Drug from One Tiny Company (Ad)
West Africa's ECOWAS bloc says it's lifting sanctions imposed on Niger over last year’s coup in a new push for dialogue
Macron booed by French farmers who blame him for not doing enough to support agriculture
S&P 500   5,088.80
DOW   39,131.53
QQQ   436.78
Warren Buffett uses his annual letter to warn about Wall Street and recount Berkshire's successes
It's Called "the Singularity" (Ad)
MarketBeat Week in Review – 2/19 - 2/23
Taiwan giant chipmaker TSMC opens first plant in Japan as part of key global expansion
AI Stock Caught Trading Under Secret Name (Ad)
A collection of the insights Warren Buffett offered in his annual letter Saturday
West Africa bloc lifts coup sanctions on Niger in a new push for dialogue to resolve tensions
6.5 Million Americans Are DESPERATE for This New Drug from One Tiny Company (Ad)
West Africa's ECOWAS bloc says it's lifting sanctions imposed on Niger over last year’s coup in a new push for dialogue
Macron booed by French farmers who blame him for not doing enough to support agriculture

Snap Stock Falters As Growth Slows To Record Low

Snaps Stock Falters As Growth Slows To Record Low

-Revenue came in at $1.11 billion missing estimates of $1.14 billion by analysts. Revenue grew by 13% y-o-y, the slowest on record.

-Earnings per share came in at -26 cents versus -10 cents during the same quarter in 2021.

-Adjusted EBITDA came in at $7.19 million, meanwhile unadjusted losses came in at $1.24 million.

-Users were up to 347 million beating estimates of 343 million. North American daily active users increased by 4%, European DAU increased by 86 million, and the rest of the world's DAU increased by 35% to 158 million.

-The company announced a $500 million repurchase program to offset dilution.

Snap NYSE: SNAP is an American camera and social media company based out of Santa Monica, California.

Snap’s shares fell in early trading hours as earnings came in slower, growing at a slower pace than previously recorded. Snap is facing increasing competition from competitors and management has re-iterated that the results do not reflect their "ambition."

The CEO noted: “We are evolving our business and strategy to reaccelerate revenue growth, including innovating on our products, investing heavily in our direct response advertising business, and cultivating new sources of revenue to help diversify our topline growth."

Snap’s business continues to grow in North America and Europe but has stumbled elsewhere

North America's average ARPU grew by 7.6% to $8.16. Europe's average revenue grew by 1.5% to $2.11. The rest of the world's ARPU fell by 10%, to $1.05. Meanwhile, Penetration in America was around 25%, 18% in Europe, and 6% in the rest of the world for the quarter.

 Considering the high ARPU in America, many believe that Snap still has a long way to go in Europe and the rest of the world, which should help to continue to push revenue at a high pace during the coming quarters.  But during the current quarter, growth slowed significantly as macroeconomic headwinds and platform policy changes weighed on results. On top of these issues, competition for advertising dollars continues to increase, which is affecting other advertising-focused businesses as well.

Despite the hiccups, Snap’s business model continues to remain robust. Management outlined that key demographic engagement, such as those over 25, grew by 40% y-o-y. Meanwhile, Snap spotlight engagement increase 59% as well. Advertisers will take this into cognizance moving forward as they look to allocate more advertising money towards Snap.


Snap continued to focus on original content and partnerships as it expanded operations in both areas during the quarter. On top of announcing multiple new features, the company continued to expand partnerships with the likes of the NBA and announced multiple original content series. Snap has also partnered with Live Nation to offer concerts and rolled out Snapchat+ in multiple countries during the quarter.

Snap continues to look towards the international market in order to drive revenue and offers multiple local language options and local content with over 500 plus international content partners.

The biggest issue facing Snap is that its user base may not be as monetizable as it previously thought. The content creation business is very competitive and Snap's business model is under pressure. The combination of the two has increasingly caused advertisers to worry about whether they will get the desired return on investment. Snap has done well to integrate advertising well into the platform, but questions remain.

Furthermore, management is cognizant of this issue and has outlined strategies to increase engagement for those who fall within the 25-35 age range. Snap offers for the most part a similar experience to Instagram, but compared to Instagram, it enjoys the loyalty of younger users. This is both a positive and a negative. Should those users remain loyal, brand loyalty will turn into revenue in the future. It remains to be seen how things will turn out in the future.

Snap’s financials and valuation

Snap’s stock is down over 80% from its 52-week high, and now trades at a much more reasonable valuation of 5x sales. Cash flow for the quarter came in at -$147 million as investments in improving the product continued to be high. Cash remains on strong footing as the company currently has over $4.9 billion in cash. Snap’s R&D and marketing spend continue to be the biggest source of operating losses. However, the cost of revenue remains high as well, especially for a company that is not capital intensive. These factors are contributing to the current operating losses, and the company may continue operating losses until it has increased both its global user market penetration and ARPU in key regions.

Snap’s management continues to focus on the fact that it believes that advertisers are moving in the direction of the younger generation as they look to target younger millennials and older Gen X. Whether the strategy is successful is yet to be seen.

→ This is the #1 Stock to Buy for the AI Tidal Wave (From Chaikin Analytics) (Ad)

Should you invest $1,000 in Snap right now?

Before you consider Snap, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Snap wasn't on the list.

While Snap currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

These 7 Stocks Will Be Magnificent in 2024 Cover

With average gains of 150% since the start of 2023, now is the time to give these stocks a look and pump up your 2024 portfolio.

Get This Free Report

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Snap (SNAP)
3.8094 of 5 stars
$10.80+0.7%N/A-13.01Hold$13.70
Compare These Stocks  Add These Stocks to My Watchlist 


Featured Articles and Offers

Search Headlines: