Snap shares down 25% on Q2 results: ‘this is the worst-case scenario’
- Snap reports weak Q2 results and refrains from offering future guidance.
- FirstMark Capital's Rick Heitzmann reacts to earnings report on CNBC.
- Snap shares tanked more than 25% in after-hours trading on Thursday.
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Snap Inc (NYSE: SNAP) shares tanked more than 25% in extended trading after the social media company reported disappointing results for its fiscal second quarter on advertising slowdown.
Snap Q2 results: a quick review
Copy link to section- Lost $422.1 million – about a 2.8 times increase on a year-over-year basis
- Per-share loss of 26 cents was significantly worse than last year’s 10 cents
- On an adjusted basis, lost 2 cents a share versus the consensus of 1 cent
- Sales jumped 13% to $1.11 billion, below Street estimates of $1.14 billion
- Daily active users up 18% YoY topped expectations by nearly 3.0 million
The earnings press release also disclosed plans of a “substantial” slowdown in hiring and operating expense. The $27 billion company had trimmed its outlook for the current quarter in May, but failed to meet even that on Thursday.
Heitzmann reacts to the earnings report on CNBC
Copy link to sectionSnap refrained from offering future guidance, saying the operating environment remains “uncertain”.
Other than the hit to digital ad-spend, Apple’s privacy changes, increased competition and a more challenging economy at large are among the headwinds currently in its face.
Still, Snap authorised up to $500 million in stock repurchase. Reacting to the earnings report on CNBC’s “Closing Bell: Overtime”, Rick Heitzmann – Founder of FirstMark Capital said:
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This is the worst-case scenario. It’s a combination of operating as well as macro problems. [What’s] also incredibly negative is suspending guidance. It’s clear that the economy in their business is unprojectable at this point.
The stock price is now down more than 70% year-to-date. Heading into the earnings report, Wall Street had an “overweight” rating on Snap with upside to $23 a share on average.
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