Social media platform owner Snap (SNAP:NYSE) failed to hang on to early investor enthusiasm in the wake of first-quarter results overnight, which beat estimates on user growth but missed on revenue and earnings.
Having ended Thursday trading (21 April 2022) down more than 4% at $29.42, the stock initially jumped 8% in response to the Q1 update, released after Wall Street closed with investors chuffed that Snap added 52 million new users during the quarter to 31 March.
That represented an 18% year-on-year rise in users 332 million.
Yet as after-market trading drew to a close the stock saw all of those gains wiped out with the market mulling forecast misses on revenue and earnings.
Earnings per share came in at -$0.02, worse than the $0.01 consensus forecast, while sales, up 38% on Q1 2021 at $1.06 billion, were below the $1.07 billion estimate.
Snap, which runs instant messaging platform Snapchat, said it expects Q2 revenue growth to be between 20% and 25% year-over-year with adjusted earnings before interest, tax, depreciation and amortisation to fall somewhere between breakeven and $50 million.
OPTIMISM TURNS TO PESSIMISM
Snap shares are seen falling nearly 1.5% to $29 when trading re-opens later today, with investors clearly concerned by more than just the revenue and earnings shortfalls.
‘In addition to ongoing platform-related headwinds, supply-chain shortages and labour disruptions, rising inflation and geopolitical unrest are presenting challenges for a wider array of industry verticals than in the prior quarter,’ said Jeremi Gorman, Snap’s chief business officer.
Snap chief financial officer Derek Andersen said that by the latter portion of Q1, advertisers in ‘a wider variety of industry groups reported concerns related to the macro operating environment, including continued supply chain disruptions, rising input costs, economic concerns due to rising interest rates, and concerns related to geopolitical risks stemming from the war in Ukraine.’
Snap stock has lost 37% in 2022 to date.
