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Why Snap Shares Fell After a Strong Earnings Report

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Snap  (SNAP) - Get Free Report shares were falling after the company beat estimates on revenue and posted a loss per share in line with estimates. But the no-guidance, in light of virus uncertainties, weighed on the stock. 

The stock fell 5% to $23 a share in postmarket trading. It was up 25% into earnings since June 11. 

Here’s what the earnings results were versus Wall Street expectations:

  • Revenue: $454M v. $442M (actual +17% year-over-year)
  • Net User Adds: 9M v. 9M (-30%) 
  • Average Revenue Per User: $1.91 v. $1.88 
  • Operating Margin: -6.8% v. -7% (Last Year: -7.8%) 
  • Adjusted Loss Per Share: 9 cents v. 9 cents (Last Year: 6 cents) 

Snap saw explosive user growth in the first quarter, as people stayed home.

Here’s what management said about guidance: "Given the uncertainties related to the ongoing COVID-19 pandemic and the rapidly shifting macro conditions, we are not providing our expectations for revenue or Adjusted EBITDA for the third quarter of 2020.”

Snap shares have been on fire in 2020, as people download the app, but the no-guidance potentially means ad spend going forward is uncertain, as brands are unclear about their revenue streams in the COVID-19 environment. 

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