Snap Inc. Shares Drop After Mixed Third-Quarter Results
Snap Inc. shares fell over 10% after the company missed revenue and user growth targets despite reporting a significant increase in profitability.
Shares of Snap Inc. fell more than 10% following a third-quarter earnings report that showed a conflict between improving profitability and slowing growth. The company reported revenue of $1.72 billion and 495 million daily active users, both slightly missing analyst projections of $1.73 billion and 499 million users, respectively.
Despite the misses, the company achieved a net income of $56 million, a sharp reversal from the $104 million loss recorded in the previous year. Adjusted EBITDA reached approximately $383 million, exceeding forecasts by 13%. For the fourth quarter, the company provided revenue guidance between $1.95 billion and $1.99 billion, aligning with market consensus.
Chief Commercial Officer Ronan Harris attributed the revenue shortfall to macroeconomic pressures in the United States and the Middle East, which reduced spending by consumer packaged goods companies. To offset these losses, the company is targeting growth in other verticals, including financial services.
Snap also announced it will shift its primary audience metric to monthly active users starting in the first quarter of 2027. This change follows investor scrutiny over the financial impact of the SPECS augmented reality glasses and pressure from Blue Duck Capital to raise external capital for the AR unit, which costs an estimated $500 million annually.
