Shares of Snap (SNAP 27.63%), the parent of Snapchat, were getting torched once again today as the company fell well short of analyst estimates in its fourth-quarter earnings report. Revenue growth was sluggish as the company failed to capitalize on a broader recovery in the digital advertising industry.
As of 11:23 a.m. ET, the stock was down 35.3% on the news.
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Snap still can't turn a GAAP profit
Snap said revenue in the quarter increased 5% to $1.36 billion, which missed the consensus at $1.38 billion. The company continued to grow its user base as daily active users (DAU) rose 10% to 414 million, though that growth rate decelerated from prior quarters.
The company continued to struggle in the ad market, even as larger peers like Alphabet and Meta posted double-digit advertising growth in their fourth quarters. That bifurcation shows advertisers may be giving up on Snapchat, and the company has struggled to monetize a platform that is, in large part, a messaging service.
On the bottom line, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) fell from $233 million in the quarter a year ago to $159 million. Adjusted earnings per share slipped from $0.14 to $0.08, beating the consensus at $0.06.
Share-based compensation remained elevated at $333 million, or roughly 25% of revenue, and shares outstanding increased 4% year over year.
What's next for Snap
Snap shares plunged along with the rest of the digital advertising sector in 2022 as the industry slowed down, but it has struggled to mount a recovery, even as stocks like Alphabet and Meta have bounced back. The company has been unable to prove it can be profitable on a generally accepted accounting principles (GAAP) basis.
Looking ahead, first-quarter guidance called for revenue of $1.095 billion to $1.135 billion, up 11%-15% and in line with estimates at $1.12 billion, and an adjusted EBITDA loss of $55 million-$95 million.
While that might indicate momentum in the right direction, given the weak growth and continued lack of profits, it's unsurprising to see investors dumping the stock again today.
