Snap stock price tumbles 7% as net loss grows 28%

Snap stock price tumbles 7% as net loss grows 28%
  • Snap Q2 revenue: $454 million vs $439.1 million expected; net loss up 28% to $326 million
  • Global daily active users (DAUs) metric grew 17% to 238 million, slightly lower than 238.48 million expected
  • Snap stock price tumbles 7% to $23.11 in premarket trading

Shares of Snap Inc. (NYSE: SNAP) fell around 7% in the after-hours trading session after the tech firm said the net loss grew nearly 30% from last year. Snap stock price is now moving towards the nearby support at $21. 

Fundamental analysis: Number of users climb, net loss widens

Snap presented its second-quarter earnings after the trading hours on Tuesday. The owner of the popular Snapchat app said it recorded revenue of $454 million, higher than $439.1 million expected from the market. 

A widely tracked indicator for social network companies – Global daily active users (DAUs) – grew 17% to 238 million, slightly lower than 238.48 million expected.

“While our revenue growth rate continues to be impacted by ongoing market disruptions, the fundamentals of our business are strong, and the high levels of engagement on our service are backed by years of investment in our self-serve advertising platform, which is helping our partners achieve success and grow their businesses in this uncertain environment,” said Evan Spiegel, Snap’s CEO.  

Earnings per share came in at $0.09, in line with the market consensus. Still, Snapt’s loss widened 28% to $326 million from $255 million last year. 

“Our Q2 financial results reflect our priorities of growing our community, making focused investments in the future of our business, and scaling our operations efficiently in order to drive towards profitability and positive free cash flow,” said Derek Andersen, Chief Financial Officer. 

Snap blamed the bigger-than-expected loss in the second quarter on long-term investments. 

Technical analysis: Snap stock price slides 

Snap share price is trading around 7% lower in premarket trading hours after initially sliding as much as 13%. The expansion of the second-quarter loss didn’t go too well with Snap investors, who pushed the stock price lower despite the surging revenue and DAUs.

Shares of Snap are now heading towards $21, where the diagonal support is located. This trend line connects two previous swing highs and it will likely provide strong support for the buyers. On the upside, the 161.8% Fibonacci extension remains the short-term target for the bulls. 

Summary

Snap share price tumbled 7% on Wednesday in premarket trading after the social media giant reported that its net loss grew 28% from last year. Shares are now heading lower towards the low $20s where important support is located.  

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