Snap stock tanks 20% on a ‘disaster’ second quarter

Snap Inc (NYSE: SNAP) just reported its financial results for the second quarter that came in slightly ahead of estimates. Shares still tanked nearly 20% in extended hours.

Why is Snap stock being punished?

The stock is being punished primarily for the outlook that wasn’t too inspiring.

Snap now forecasts its revenue to fall between $1.07 billion and $1.13 billion in its current fiscal quarter. The top end of that range is in line with the FactSet consensus. On CNBC’s “Closing Bell: Overtime”, Wedbush analyst Dan Ives said:

The New York listed firm is convinced that its daily active users will climb roughly to 406 million in Q3. Snap stock is still up roughly 14% versus the start of 2023.

Notable figures in Snap’s Q2 earnings report

• Lost $377 million versus the year-ago $422 million
• Per-share loss also narrowed a bit from 26 cents to 24 cents
• Revenue inched down 4.0% year-on-year to $1.07 billion
• Consensus was 25 cents loss on $1.05 billion in revenue

Snap noted an 8.0% decline in its operating expenses in the second quarter related primarily to a cost-cutting programme it initiated last year. According to Dan Ives:

Snap continues to increase its DAUs

Snap ended the quarter with a total of 397 million daily active users – up 14%. Still, the Wedbush analyst warned:

Experts had forecast up to 406 million DAUs on Snap at the end of Q2. The social media company reported $2.69 of average revenue per user in its recently concluded quarter versus $2.68 expected.

Heading into the earnings print, Wall Street rated Snap stock at “hold” on average.