Snap Stock Tumbles: Here’s Why Investors Are Bailing This Week
Snapchat's parent company hits a rough patch—and Wall Street isn't smiling back.
Another tech darling bites the dust as Snap's stock slides. No earnings miss or scandal this time—just the market's fickle love affair with growth stocks turning sour.
Advertising slowdown? Check. Competition eating its lunch? Probably. Another 'transitional quarter'? You bet. Snap's leadership keeps promising a turnaround while the stock charts look like a ski slope.
Meanwhile, crypto markets shrug—after all, watching traditional tech stocks flail is becoming a spectator sport for decentralized finance enthusiasts. At least Bitcoin doesn't blame 'macro headwinds' every quarter.
Not the most inspiring quarter
The quarter saw Snap book revenue of just under $1.35 billion, representing a rise of 9% year over year. That percentage rate increase matched that for daily active users (DAUs; a critical metric for the social media industry), which totaled 469 million. Another industry yardstick, average revenue per user (ARPU), however, only inched up by $0.01 to $2.87.
Image source: Getty Images.
Meanwhile, the company's net loss deepened, to almost $263 million ($0.16 per share) from the year-ago deficit of nearly $249 million.
This performance was broadly in line with analyst expectations. The consensus pundit estimate for revenue matched the actual $1.35 billion, while that for net loss was $0.15 per share.
In a conference call, Snap management proffered guidance for its current (third) quarter, saying it expected a rise in DAUs to around 476 million, with revenue landing at slightly under $1.48 billion to a bit over $1.5 billion.
New debt to come
Snap soon followed its earnings release announcement with an announcement that it was aiming to raise $550 million in fresh borrowings (upsized from its original target of $500 million). The company is floating a series of senior notes at that aggregate principal amount, with annual interest of nearly 6.88%. They mature on March 15, 2034.
