Analysts foresee Snap Inc (NYSE: SNAP) shares potentially declining further following a 35% drop on Wednesday due to disappointing fourth-quarter results.
Oppenheimer analysts, in response to the earnings release on Tuesday, expressed concerns, stating,
“Snap continues to suffer from lack of scale.”
They highlighted intense competition for advertisers, attributing Snap’s struggles to “ceding revenue share to larger social media platforms.”
Snap reported fourth-quarter revenue of US$1.36 billion, falling short of analysts’ projections of $1.38 billion. Oppenheimer suggests that investors had hoped for robust revenue growth over the modest 5% year-on-year growth recorded, especially after a weak performance in October.
The bank noted monetization challenges in ad targeting and measurement amid increased competition for ad budgets. Analysts further suggested that Snap must develop products for older users to drive growth.
Oppenheimer lowered its pre-tax earnings forecast for Snap in 2024 from US$333 million to US$244 million. Revenue expectations were also adjusted downward to US$5.3 billion.
Snap (NYSE: SNAP) Stock Movement
SNAP stock plummeted -34.61% to close at $11.41 on Wednesday. The traders had exchanged hands with 184,659,986 (184.65 million) shares compared to the average daily trading volume of 24.70 million.
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