Snap shares fell in pre-open trading after the Snapchat parent reported third-quarter revenue and user numbers below analyst expectations. Ad revenue growth slowed, and the company said it will stop reporting daily active users from 2027.
Snap stock tumbled 9.8% in pre-open trading to $5.34 after a mixed third-quarter earnings report on Wednesday evening. The results missed on the metrics investors prioritize most.
Revenue and users miss estimates
Revenue of $1.72 billion came in just below the $1.73 billion Wall Street consensus. Daily active users reached only 495 million, short of the 499 million analysts had projected.
Advertising was a particular sore spot. Ad revenue grew just 4% year-over-year in Q3, down from 9% growth in Q2.
Executives point to weaker ad spending
Chief commercial officer Ronan Harris attributed part of the shortfall to reduced spending from consumer packaged goods companies. CEO Evan Spiegel acknowledged that "advertising revenue growth remains below our ambitions."
Snap also said it will stop reporting daily active users starting in 2027, shifting to monthly active users as its primary engagement metric. Some market participants interpreted the decision as an attempt to obscure slowing user momentum.
B.Riley trims target as Snap posts GAAP profit
Mizuho maintained a Neutral rating and a $6 price target. B.Riley trimmed its target to $8 from $10 but kept its Buy rating, citing strong operating leverage and a Q4 outlook that edged past consensus.
The broader market offered little cushion. The S&P 500 was essentially flat, the Dow Jones edged modestly higher and the Nasdaq was under mild pressure.
Even so, Snap delivered its first GAAP-profitable quarter in years, with net income of $56 million and adjusted EBITDA of $383 million, well ahead of expectations.
Source: Investing.com
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