Snap just delivered a mixed earnings report that has Wall Street on edge. The Snapchat parent beat fourth-quarter sales expectations with $1.72 billion in revenue but immediately spooked investors with weak first-quarter guidance of $1.50-$1.53 billion, missing the $1.55 billion analysts were expecting. Shares rose over 2% in after-hours trading Wednesday, but the real story isn't the numbers - it's CEO Evan Spiegel's aggressive bet on augmented reality glasses as the company bleeds users and grapples with tightening social media regulations across the globe.
Snap is caught in a familiar tech industry paradox - beating expectations while simultaneously disappointing the market. The company's fourth-quarter earnings released Wednesday show revenue climbing 10% year-over-year, with net income of $45.2 million up nearly 400% from the $9.1 million reported a year ago. Adjusted EBITDA hit $358 million, sailing past StreetAccount's $300 million projection. But investors are looking ahead, and what they see isn't pretty.
The first-quarter revenue guidance of $1.50-$1.53 billion came in below analyst estimates, immediately shifting the narrative from quarterly wins to future struggles. It's a storyline Meta and other social media giants know well - the pressure to not just perform but to exceed expectations quarter after quarter while navigating an increasingly hostile regulatory landscape.
The user numbers tell a more complicated story. Global daily active users dropped to 474 million, missing Wall Street's 478 million forecast and falling 3 million quarter-over-quarter. Snap blamed the decline on pulling back marketing spend "in order to focus on more profitable growth," according to the investor letter. But there's another factor at play - Australia's aggressive new social media minimum age act forced the company to implement platform-level age verification that resulted in approximately 400,000 account removals.
