Snap Stock Falls After Q2 Earnings Miss Despite User Growth

Snap's revenue misses estimates as ad market weakens

Snap Inc. (NYSE: SNAP) reported its second-quarter earnings on Thursday that topped analysts' estimates for revenue and user growth. However, the social media company's stock tanked in after-hours trading on Thursday as it missed revenue expectations by a significant margin.

Snap reported $1.11 billion of revenue in the recent quarter that represents a 13% annualised growth and fell short of analysts' estimate of $1.14 billion. On a year over year basis, the company's daily active users jumped by 18% to 347 million, versus a slightly lower estimate of 346.05 million.

Key figures in Snap's Q2 financial report

• Net income limited to $106.3 million versus $152.2 million last year
• Per-share earnings capped at $0.10 versus a significantly higher $0.22 in Q2 of 2021
• Adjusted net income stood at $151.6 million that translates to $0.18 of earnings per share

CEO Evan Spiegel comments on financial results

CEO Evan Spiegel commented on the financial update on Thursday and said: "We are pleased to see continued growth in our community. This quarter, we reached 347 million daily active users, an increase of 18% year-over-year. We also saw strong engagement, with daily time spent per user increasing by more than 20% year-over-year."

Despite upbeat remarks from the CEO, Snap stock tanked by over 25% in extended trading on Thursday. The decline in the share price could be attributed to the company's weaker-than-expected revenue that missed estimates considerably. Other social media stocks, including Meta Platforms and Twitter, also posted losses in extended trading on Thursday.

Snap stock performance in 2022

Including the price action on Thursday, Snap is now down by about 75% since the start of the year. At the time of writing, the Snapchat parent company is valued at $19.41 billion and has a price to earnings ratio of 34.39.

Snap performed slightly downbeat in the stock market last year with an annual decline of close to 40%. In 2020, it had gained over 48% in the stock market.