Snap (NYSE:SNAP) stock rose as much as 20% higher after the market close following the company’s earnings report, but shares have since given up most of those gains. Still, the social media and technology company beat analyst estimates for a variety of metrics.
During the third quarter, revenue tallied in at $1.19 billion, up by 5% year-over-year (YOY) and ahead of the analyst estimate for $1.11 billion. Adjusted EPS also came out on top at 2 cents versus the estimate for a loss of 4 cents. Importantly, global daily active users was 406 million as well, up by 12% YOY and beating the estimate for 405.7 million, while average revenue per user was $2.93, which beat the estimate for $2.74.
The company’s My AI chatbot also seems to be making strides. Since its inception, over 200 million people have sent over 20 billion messages.
SNAP Stock: Snap Reports Third-Quarter Earnings
These numbers alone were a cause for celebration. On top of that, Snap has also authorized a $500 million stock repurchase program, which will be active for the next 12 months.
However, Snap’s management dulled the mood by warning of a slowdown in ad spending due to the war between Israel and Hamas. Snap is also still unprofitable with a net loss of $368 million compared to the loss of $360 million a year ago.
“In addition, we observed pauses in spending from a large number of primarily brand-oriented advertising campaigns immediately following the onset of the war in the Middle East, and this has been a headwind to revenue quarter-to-date,” said Snap.
The company noted that it continues to see pauses in ad spending and that “the risk that these pauses could persist or increase in magnitude remains.”
On the bright side, Snap provided unofficial Q4 revenue guidance of between $1.32 billion and $1.375 billion while analysts expect $1.33 billion. Management declined to provide official guidance due to the war.
Analysts seem to be impressed with the quarter. Morgan Stanley raised its price target to $7 from $6.50 while Piper Sandler raised its target to $9 from $8 and RBC Capital raised its prediction to $10 from $9, among others.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
