Shares of Snap Inc. (SNAP) plunged 14.74% in after-hours trading on Tuesday following the release of its first-quarter 2025 financial results. The social media giant, known for its popular app Snapchat, disappointed investors with an earnings miss and refrained from providing guidance for the upcoming quarter, citing economic uncertainties.
Snap reported a loss of $0.08 per share for Q1, falling short of analysts' expectations of a $0.03 profit. This significant earnings miss appears to be the primary driver behind the stock's sharp decline. Despite the disappointing bottom line, Snap's revenue slightly exceeded estimates, coming in at $1.36 billion compared to the expected $1.35 billion, representing a 14.1% year-over-year growth.
Adding to investor concerns, Snap announced in its investor letter that it would not provide guidance for the second quarter due to "macro economic uncertainty." This lack of forward-looking information likely contributed to the negative sentiment surrounding the stock. The company also lowered its full-year adjusted operating expenses outlook to $2.65 billion - $2.70 billion from the previous forecast of $2.70 billion - $2.75 billion, signaling potential cost-cutting measures.
On a more positive note, Snap reported 460 million daily active users, surpassing the estimated 458.3 million, and posted an adjusted EBITDA of $108.425 million, significantly beating the expected $64.7 million. The company's CFO highlighted that Other Revenue, primarily driven by Snapchat+, increased 75% year-over-year to reach $152 million in Q1. However, these metrics were not enough to offset the earnings miss and guidance withholding, as evidenced by the stock's after-hours performance.
The sharp decline in Snap's stock price reflects growing investor concerns about the company's profitability and future growth prospects in an increasingly challenging economic environment. As the digital advertising market faces headwinds, Snap's performance in the coming quarters will be closely watched by investors and analysts alike.
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