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Snap is coming off its worst day on the market since its 2017 debut. The company’s two biggest one-day declines were a 43% drop in May 2022 and a 39% plunge two months later.
Snap reported revenue of $1.36 billion for the quarter, slightly below analysts’ expectations of $1.38 billion, according to LSEG (formerly Refinitiv). The company reported adjusted EPS of 8 cents, compared to analyst estimates of 6 cents.
The results mark the company’s sixth consecutive quarter of single-digit growth or sales decline. Snap expected growth to gain momentum in the first quarter, but not as quickly as analysts had expected.
In a note to investors on Wednesday, Morgan Stanley analysts maintained an underweight rating on Snap and lowered their price target to $11, noting that the company’s advertising turnaround has been slower than expected and engagement has been weak. did. They pointed to significant advertising improvements and impression growth on Meta and Amazon that could create new headwinds for Snap’s ad revenue.
“While we are encouraged by the progress of our advertising platform and the improved results we are delivering to many of our advertising partners, we estimate that the outbreak of the Middle East conflict was a year-over-year headwind. This represents approximately 2 percentage points of growth,” Snapp said in a letter to investors.
Barclays analysts remained optimistic after the results, maintaining an overweight rating and $15 price target on the stock, writing, “While buy-on-the-dip looks worrying, it’s probably the right move here.” There is.
“In retrospect, the fourth quarter was mixed, but the acceleration in the first quarter gives us confidence that things are getting back on track,” the analysts wrote. “SNAP feels like META was about five quarters ago. It was on the top of a pretty impressive recovery trend, but very few people believed this theory.”
JPMorgan analysts reiterated their underweight rating on Snap stock, but raised their price target from $9 to $11 based on expected 2025 revenue of approximately $5.9 billion, calling for a “unstable recovery.” Taking this into account, they wrote, “stronger growth in engagement and advertising platforms” is needed. ” is reflected in the company’s fourth quarter earnings and first quarter outlook.
“In the meantime, Snap stock’s extreme volatility will deter many. The company needs to continue to show it can drive improved execution,” they wrote.
—CNBC’s Michael Bloom and Jonathan Vanian contributed to this report.
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