Snap Stock Sinks 29.8% Following 2023 Fourth-Quarter Revenue Miss Despite Profit Beat

LOS ANGELES, CA – Shares of Snap, the social media platform known for its Snapchat app, took a dive after reporting its fourth-quarter financial results. Despite exceeding adjusted profit estimates, the company fell short of revenue targets, prompting a 29.8% drop in its stock price.

Snap faces tough competition from Meta Platforms, TikTok, and Alphabet’s YouTube short-form video services. The company’s daily active user growth slowed in the December quarter, adding 8 million users, below the 12 million added in the same period the year before. In North America, daily active users actually decreased by one million from the previous quarter.

Looking ahead, Snap forecasts an EBITDA loss for the first quarter of 2024, along with increased investments to drive consumer engagement. The company reported adjusted earnings per share of 8 cents for the fourth quarter, down from 14 cents in the year-earlier period. Despite a 5% revenue increase to $1.36 billion, the figure fell short of the expected $1.38 billion.

Snap’s September-quarter revenue also rose 5%, but the company experienced declines in sales during the first two quarters of 2023. Its subscription service, Snapchat+, had 7 million subscribers as of December 2023, up from 5 million in September of the same year.

Snap also announced plans to cut 10% of its workforce in 2024 as part of a restructuring effort, following a 20% reduction in August 2022. Throughout these changes, the company continues to earn most of its revenue from digital advertising.

As Snap grapples with the challenges, investors are keeping a close eye on the company’s performance and its ability to navigate the competitive landscape in the social media sector. With the company’s stock experiencing significant fluctuations following the financial report, stakeholders are eager to see how Snap’s strategies for driving user engagement and profitability will play out in the coming months.