Feb 4, 2020 - Economy & Business

Snap stock sinks after mixed Q4 earnings

Illustration: Rebecca Zisser/Axios

Snap Inc.'s stock was down 11% Tuesday in after-hours trading after the company reported it fell short on Wall Street's revenue expectations.

Yes, but: The company otherwise did pretty well. It turned its first-ever profit on an adjusted basis and grew its user base for the fourth consecutive quarter. It also provided positive guidance for the quarter ahead.

Details: Snap's user base grew to 218 million daily active users. This is a big comeback from 2018, when the company's user growth stalled for a period of time.

By the numbers, per CNBC:

  • Earnings: 3 cents per share vs. 1 cent per share forecast by Refinitiv
  • Revenue: $561 million vs. $563 million forecast by Refinitiv
  • Global daily active users (DAUs): 218 million vs. 215 million forecast by FactSet
  • Average revenue per user: $2.58 vs. $2.62 forecast by FactSet

What they're saying: “The strength in our core business gives us confidence in our long term growth and profitability and we’re excited to build on these results in 2020 and beyond," Snap Inc. CEO Evan Spiegel said in a statement Tuesday.

Between the lines: Investors were bullish ahead of earnings. JPMorgan said Tuesday that it expected strong user growth from Snap, and Deutsche Bank lifted its price target for Snap on Monday.

Flashback to Q3: Snapchat adds 7 million daily active users

Go deeper

Earnings on pace for a strong rebound

Data: FactSet; Chart: Axios Visuals

Thanks to a cadre of better-than-expected earnings results from the companies that have reported their fourth-quarter earnings so far, the earnings growth rate for the S&P 500 has risen to 0.7%.

Why it matters: That is a far cry from the estimated earnings decline of -1.7% at the end of the quarter. If it holds, this would mark the first time the index has reported year-over-year growth in earnings since Q4 2018. 

Scoop: Snapchat's new wellness push

Illustration: Sarah Grillo/Axios

Snapchat is launching a new set of tools and custom content around mental health and wellness, sources tell Axios. One tool includes a search function that surfaces health and wellness resources on topics including depression, suicide and anxiety.

Why it matters: It's the first product launch around what will be a bigger health and wellness push from Snapchat that will be rolled out in the next few months.

Stock traders expect stimulus to save the day despite coronavirus fears

Illustration: Sarah Grillo/Axios

News about the coronavirus outbreak got worse on Monday, but stock traders saw a stimulus bat-signal in the sky and sent the Dow to its biggest points gain on record — 1,294 points.

Why it happened: Stock prices jumped after it was confirmed that finance ministers and central bank governors from each of the G7 countries would hold a conference call Tuesday morning, presumably to announce coordinated stimulus measures to deal with the coronavirus outbreak.