Snap Inc. Shares Plummet 31% After Missing Revenue Expectations and Forecasting Losses

Snap Inc. Shares Plummet 31% After Missing Revenue Expectations and Forecasting Losses

Snap Inc.’s (NYSE:SNAP) stock took a sharp plunge of 31% in after-hours trading on Tuesday following the company’s disappointing Q4 earnings report and bleak forecast for the March quarter.

In Q4, the social media giant reported adjusted earnings per share (EPS) of 8 cents, down from 14 cents in the same period last year and falling short of analysts’ expectations of 6.4 cents. Revenue for the quarter reached $1.36 billion, marking a 4.7% increase year-over-year but falling below the consensus estimate of $1.38 billion.

Revenue from North America totaled $899.5 million, up 2.2% year-over-year, surpassing the projected $875.9 million. However, adjusted EBITDA declined by 32% year-over-year to $159.1 million, though it surpassed the expected $111.8 million.

Snap reported 414 million daily active users (DAUs) for the quarter, representing a 10% increase from the previous year, slightly exceeding the consensus of 411.59 million. However, the average revenue per user (ARPU) dropped by 5.2% year-over-year to $3.29, missing expectations of $3.33.

The company’s free cash flow for the quarter surged by 41% year-over-year to $110.9 million, outpacing analysts’ expectations of $82 million.

Looking ahead to fiscal Q1, Snap anticipates revenue in the range of $1.10 billion to $1.14 billion, compared to the consensus projection of $1.11 billion. However, the company expects a significant adjusted EBITDA loss ranging between $55 million and $95 million, well above the estimated $32.7 million.

Snap also forecasts 420 million DAUs in the first quarter, surpassing the expected 418.55 million.

Market Resurgence: S&P 500 Rebounds on Earnings Strength Despite Tech Weakness

The S&P 500 made a strong recovery in the latter part of the trading day, resuming its journey towards record highs after a recent setback. This resurgence was fueled by robust corporate earnings, which helped offset the weakness in technology stocks, particularly those in the chip sector.

By 3:35 PM ET (8:35 PM GMT), the S&P 500 had edged up by 0.1% to reach 4,954.24, inching closer to its previous record close on February 2nd at 4,958.61. The Nasdaq Composite, weighted heavily towards tech, also saw a 0.1% increase, while the Dow Jones Industrial Average surged by 141 points or 0.1%.

Eli Lilly, Palantir, and Spotify were among the companies that impressed investors with their earnings reports. Eli Lilly, despite initially gaining, closed just below the flatline after reporting fourth-quarter results that exceeded expectations, mainly due to high demand for its new obesity and diabetes drugs.

Palantir Technologies Inc saw a remarkable surge of nearly 31% following its Q4 beat on both revenue and profit, driven by a substantial increase in commercial revenue from new business deals. Wedbush analysts raised their price target on the stock to $30, noting Palantir CEO Alex Karp’s pivotal role in shaping the company’s AI capabilities for future enterprise needs.

Spotify Technology SA narrowed its losses in the fourth quarter, with a 17% increase in revenue, outperforming Wall Street’s expectations and leading to a nearly 4% rise in its share price.

However, the tech sector faced pressure from declining semiconductor stocks, notably NVIDIA Corporation, Advanced Micro Devices Inc, and Rambus Inc. Rambus reported a significant 19% drop in revenue in Q4 compared to the previous year.

DocuSign Inc experienced a 2% decline after announcing a 6% reduction in its workforce and signaling its intention to remain a publicly traded company following stalled talks with potential buyers reported by Reuters. The company framed these job cuts as part of a restructuring plan aimed at achieving long-term growth goals as an independent entity.

Federal Reserve officials reiterated their stance on maintaining current interest rates, emphasizing the need to address inflation to reach the 2% target. Minneapolis Fed President Neel Kashkari noted that recent inflation data indicated progress towards the target but cautioned that further efforts were required. Federal Reserve Bank of Cleveland President Loretta Mester suggested a potential rate cut later in the year if inflation continues to moderate but emphasized that any decision would not be rushed.

Triumph Group Lands Five-Year MRO Contract for Boeing Aircraft Nacelles

Triumph Group, Inc. (NYSE:TGI), a leading aerospace and defense systems manufacturer, has clinched a significant five-year contract to provide maintenance, repair, and overhaul (MRO) services for CF6-80C2 nacelles utilized across diverse Boeing (NYSE:BA) aircraft fleets. The contract, granted by an undisclosed Asia Pacific operator, will be managed by Triumph’s esteemed Product Support business situated in Chonburi, Thailand (TASA).

With a rich history in servicing CF6 nacelles, Triumph intends to leverage its array of cost-effective repair solutions to fulfill the contract’s stringent requirements. Jim Berberet, President of TRIUMPH Product Support, underscored the company’s dedication to delivering competitive pricing, dependable turnaround times, and top-notch products and services.

Triumph’s Product Support arm offers comprehensive life cycle solutions for various aircraft categories, spanning commercial, regional, and military models. Its services extend beyond mere delivery to streamline the MRO supply chain, encompassing the repair of aircraft structures, nacelles, as well as engine and aircraft accessories and components.

Headquartered in Radnor, Pennsylvania, Triumph Group specializes in designing, developing, manufacturing, repairing, and overhauling a diverse range of aerospace and defense systems and components. With a global footprint, the company serves a wide clientele, including original equipment manufacturers and a diverse spectrum of military and commercial aircraft operators.

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