Snap (SNAP) stock tanked on Wednesday, sinking more than 30% as investors digested another disappointing quarterly earnings report.
The Snapchat parent company posted quarterly revenue of $1.36 billion, below street estimates for $1.38 billion. The company has now missed revenue estimates on six of the last eight reports. And now it says it expects to lose more money in the current quarter than Wall Street expected too.
The company is projecting an adjusted EBITDA loss in a range of $55 million to $95 million, a wider loss than the $32.7 million Wall Street expected.
Snap says that the loss will come alongside a higher revenue growth rate than seen last quarter as the company continues on its “investment plans.”
For investors, the key question will be if those plans help Snap complete its turnaround story. Given the company’s expected EBITDA guidance coming in significantly lower than expectations, RBC Capital Markets analyst Brad Erickson believes investors may be tired of waiting for the turnaround.
“Investors’ patience for underwriting growth-oriented investments seems poised to continue thinning,” Erickson wrote in a note to clients.
Investors bet heavily on the Snap turnaround story this past year, with shares up more than 60% over the past six months. But when quarterly reports came, the story didn’t change much. The stock tumbled in reaction to each of the last seven earnings reports as investors struggled to see how a company whose shares were once more than $80 a share could create a solid growth pitch again.
MoffettNathanson senior research analyst Michael Nathanson said that the market was “once again fooling itself that this time would be different” as Snap shares soared over the past several months. He added that the Snap story has often felt like investors are only a quarter away from seeing change “every quarter.”
“Truth is, with the ramping competition in AI-enabled product solutions at major, larger companies, it is hard to see how Snap’s competitive position and financial profile gets materially better,” Nathanson wrote in a note to clients on Wednesday.
