Snap Stock Drops 8% as the Earnings Bounce Turns Into a Selloff – Here’s Why
TLDR
- Snap stock jumped 15% after Q2 earnings then reversed, now down around 10% from its post-earnings high
- Q2 revenue came in at $1.60 billion, up 18.9% year over year, beating the $1.54 billion estimate
- North American daily active users fell 7% year over year, a key concern for ad revenue growth
- Zacks downgraded SNAP to “strong sell,” while the consensus rating remains “hold” with a $7.65 price target
- CEO Evan Spiegel dodged questions on pre-orders for the $2,195 Snap Specs glasses, launching in September
Snap stock hit $5.32 on Wednesday after Zacks Research downgraded it from “hold” to “strong sell,” a drop of 8.1% on the day. The stock had previously closed at $5.79.
The selloff came just days after SNAP jumped 15% on the back of a Q2 earnings beat. Revenue rose 18.9% year over year to $1.60 billion, clearing the $1.54 billion estimate. Adjusted EBITDA surged 505%, and the adjusted loss of $0.10 per share was narrower than the expected $0.12 loss.
But the initial excitement didn’t last. Investors started looking closer at the user numbers, and what they found wasn’t pretty.
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