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Snap (SNAP) stock tumbled Wednesday, dropping more than 30% as investors digested another disappointing quarterly earnings report.
Snapchat’s parent company reported quarterly revenue of $1.36 billion, below expectations of $1.38 billion. The company has currently missed revenue estimates in six of its past eight reports. And now the company has said it expects to incur higher losses this quarter as well than Wall Street expected.
The company now expects an adjusted EBITDA loss in the range of $55 million to $95 million, wider than the $32.7 million that Wall Street was expecting.
Snap said the loss would be accompanied by higher revenue growth than this quarter as the company continues its “investment plans.”
A key question for investors is whether these plans will help Snap complete its turnaround story. RBC Capital Markets analyst Brad Erickson thinks investors may be tired of waiting for a turnaround, given that the company expected EBITDA guidance to be significantly lower than expected. There is.
“Investors’ patience with taking on growth-oriented investments will continue to wane,” Ericsson said in a note to clients.
Investors bet big on Snap’s turnaround story last year, with the stock up more than 60% in the past six months. But when the quarterly reports come, the story doesn’t change much. Stocks have fallen in response to each of the last seven earnings reports as investors try to determine whether a company that once commanded more than $80 a share can once again generate a solid growth trajectory.
MoffettNathanson senior research analyst Michael Nathanson said the market was “again fooling itself that this time would be different” as Snap stock has soared over the past few months. He added that Snap’s article often makes investors feel like they’re only four quarters away from seeing a “quarter-to-quarter” change.
“The truth is, given the increasing competition for AI-enabled product solutions at large, large companies, it is difficult to see how Snap’s competitiveness and financial position will significantly improve,” Nathanson said in a statement to customers Wednesday. I wrote it in a memo.
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