Why Is Snap Stock Tanking Premarket Today?

Shares of social-media and camera company Snap, Inc. (SNAP) plummeted nearly 17% in Wednesday’s early premarket session as investors dumped the stock after the company reported quarterly revenue that roughly aligned with estimates and a loss. 

Some operating metrics also showed softness.

If the premarket losses are sustained in the regular session, the stock is on track to record its biggest single-day loss in a year.

Snap stock has fallen nearly 13% year-to-date, underperforming the broader market and the tech sector.

On Stocktwits, retail sentiment toward Snap stock improved to ‘extremely bullish’ (85/100) by early Wednesday, from ‘neutral’ a day ago. The message volume also increased to ‘extremely high’ levels.

Santa Monica, California-based Snap reported a loss per share of $0.16 compared to the year-ago loss of $0.15. Revenue rose 9% year-over-year (YoY) to $1.344 billion, roughly in line with the Fiscal.ai-compiled consensus of $1.345 billion.

CEO Evan Spiegel said, “Our global community continued to grow in Q2, reaching 932 million Monthly Active Users as we continued to invest in AI and augmented reality.”

Second-quarter daily active users (DAU) came in at 469 million, up 9% YoY. The global average revenue per user (ARPU) fell sequentially to $2.87 from $2.96.

On the earnings call, the company guided third-quarter revenue in the range of $1.475 billion to $1.505 billion and DAU of 476 million.  Analysts, on average, estimate revenue of $1.476 billion for the quarter.

“With meaningful inventory and conversions growth this quarter, including the broader rollout of Sponsored Snaps, we’re excited about the opportunity to translate improved advertiser performance into topline acceleration.”

The company estimates adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to be in the range of $110 million to $135 million.

Retail watchers of the stock looked to buy the dip. “$SNAP buying some tomorrow,” a watcher said.

Another bullish user lamented that the stock tends to decline after every earnings report and said, “It’s absolutely hated by the Street.”

Analysts’ average price target for Snap stock is $9.88, according to Koyfin. The average 12-month return implied by the consensus price target points to 5% upside from current levels.

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