Snap Stock Tumbles 13% After Q1 Earnings Beat, No Guidance

Snap Stock Plunges After Q1 Earnings: Revenue Growth Fails to Calm Investor Jitters

Snap Inc. (NYSE: SNAP) reported first-quarter 2025 earnings on Tuesday, April 29, revealing a stark contrast between user growth and market confidence. While revenue climbed 14% year-over-year (YoY), shares plummeted 14% in extended trading as investors grappled with advertising uncertainties and the company’s decision to withhold forward guidance.

Q1 2025 Financial Snapshot

• Revenue: $1.36 billion (up 14% YoY).
• Net Loss: Narrowed to $140millionvs.$305 million in Q1 2024.
• Daily Active Users (DAUs): 460 million (up 9% YoY).
• Monthly Active Users (MAUs): 900 million (a company record).
• Snapchat+ Subscribers: 15 million (59% YoY growth).

Despite beating revenue estimates, Snap’s refusal to provide Q2 guidance overshadowed results. CEO Evan Spiegel pointed to “macroeconomic volatility” and shifting ad budgets tied to regulatory changes, including the expiration of a tax exemption impacting e-commerce imports.

User Growth vs. Monetization Challenges

Snapchat’s global MAU milestone highlights success in emerging markets like India, where affordable smartphones and internet access drove adoption. However, stagnant growth in North America and Europe—where ad revenue per user remains highest—raised concerns. Key metrics:

• North America ARPU: $2.96 (flat YoY).
• Europe ARPU: Declined slightly.
• Rest of World ARPU: Remains under $1.

“We’re balancing growth in new regions with monetization in mature markets,” Spiegel said, emphasizing AI-driven ad tools and AR features to retain advertisers.

Advertising Headwinds Take Center Stage

Snap’s ad revenue grew 9% YoY to $1.21 billion, led by small-business campaigns. However, brand ad spending dipped 3%, reflecting broader industry caution. Analysts flagged risks from the de minimis exemption’s May 2 expiration, which could disrupt ad budgets tied to cross-border e-commerce.

To adapt, Snap is:

1. Expanding its Agency Partner Program for diverse advertisers.
2. Launching Sponsored Snaps to simplify ad auctions.
3. Doubling down on AI for real-time content recommendations.

Bright Spots: Snapchat+ and AR Innovation

Snapchat+ subscriptions now annualize at $600 million, outpacing rivals like Meta Verified. The service’s exclusive filters and early feature access drove 15 million paid users. Meanwhile, AR tools like AI Video Lenses and Easy Lens generated over 2 billion impressions, signaling long-term engagement potential.

Analysts Split on Snap Stock’s Future

While cost-cutting boosted EBITDA by 137% to $108 million, Snap’s stock remains down 18% year-to-date. Analysts cite conflicting signals:

• Bull Case: Strong user growth and subscription upside.
• Bear Case: Ad reliance and U.S./Europe stagnation.

“Snap needs to prove it can monetize beyond ads,” said one market strategist. “Until then, volatility will dominate.”

Investor Takeaway

Snap’s Q1 underscores its resilience in user engagement and subscription growth, but ad uncertainties and guidance silence leave near-term risks. Long-term success hinges on AR innovation and cracking monetization in emerging markets.

Disclaimer: This article summarizes publicly available data and earnings reports. Figures and statements may change. FinanceTract is not affiliated with Snap Inc. For official updates, visit investor.snap.com.