Snap, Inc. (NYSE:SNAP) announced its fourth-quarter financial results, revealing a performance that exceeded Wall Street expectations on the earnings and revenue fronts but showed a modest downturn in daily active user figures. The social media company reported earnings of three cents per share for the quarter, outpacing the consensus estimate which forecasted a loss of three cents per share as per Benzinga Pro data.
Revenue for the quarter reached $1.72 billion, which represents a 0.84% positive variance against the analyst consensus of $1.702 billion. This revenue level corresponds to a year-over-year increase of approximately 10.21% from $1.557 billion recorded in the fourth quarter of the previous year.
Despite these encouraging financial results, Snap's daily active users (DAUs) decreased slightly to 474 million in the fourth quarter, down from 477 million DAUs in the preceding third quarter. This decline in user engagement presents some considerations regarding the platform's reach and growth dynamics.
CEO Evan Spiegel commented on the financial outcomes, noting, "Our Q4 results began to reflect the impact of our strategic pivot toward profitable growth, translating into revenue diversification and meaningful margin expansion." This statement highlights the company's focus on enhancing profitability and expanding its revenue streams, which is evident in the stronger earnings and revenue figures.
On the stock market front, Snap's shares experienced a moderate gain of 0.7%, reaching $5.95 in pre-market trading following the earnings announcement, signaling some investor confidence in the reported results despite the decrease in user numbers.
Subsequent to the earnings release, notable adjustments were made by financial analysts regarding Snap's stock price targets. Susquehanna analyst Shyam Patil retained a Neutral rating on Snap but lowered the price target from $9 to $6.5, reflecting a tempered outlook despite the company's earnings beat.
Mizuho analyst Lloyd Walmsley also maintained a Neutral rating but reduced the price target from $9 to $7, indicating cautious sentiment amid the company's mixed performance metrics.
Similarly, Rosenblatt analyst Barton Crockett upheld a Neutral stance while decreasing the price target further from $9.5 to $6.4, underscoring a consensus among analysts favoring a conservative valuation adjustment in light of recent results.
These revised price targets suggest that while analysts acknowledge Snap's better-than-expected quarterly performance and strategic initiatives, they remain cautious about the company's ability to sustain growth and expand its user base in the short term.
Investors considering a position in SNAP stock are advised to weigh the recent earnings performance against the decline in daily active users and the accompanying analyst price target reductions, as these factors collectively shape the stock's near-term outlook.