Why did Snap stock plunge today? More earnings pain in stalling revenues
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Snap (NYSE:SNAP) tanked 28.1% Friday, backing up its premarket decline, after it posted the worst revenue growth rate in its history despite strong user growth - leaving investors wondering how the company can goose stalling sales in a tough environment for ads.
The stock hit a near-four-year-low (its lowest point since February 2019, to be exact), and it pulled off its worst trading session since - well, since July 22, the day after its last disappointing earnings report (it sank 39.1% that day).
The stock has fallen by a double-digit percentage four times this year, and those four bad days took particularly bad bites: Snap stock (SNAP) fell 10.2% on Jan. 13, but slid 23.6% Feb. 3 after Q4 earnings; slid more than 43% May 24 after warning it would miss low-end projections in Q2; and fell 39% July 22, when it reported those disappointing Q2 numbers.
Analysts fretted about a "platform in transition" that may be facing execution risk and an over-reliance on less proven branded advertising.
That came even though Snap used its earnings call to say it was focusing on reducing its reliance on branded advertising and pumping up performance on direct-response ads.
And in a stock market that saw broad advancers, social-media stocks were one of the few groups to show a decline as Snap contagion spread to rivals. Meta Platforms (META) wrapped the session down 1.2%; Twitter (TWTR) fell 4.9%; and Pinterest (PINS), which often moves in concert with Snap, slid 6.4%. Only Google, considered less exposed to Snap's issues than peers, came out ahead in the space: (GOOG) +0.9%; (GOOGL) +1.2%. Those declines were reflected in a rough day for a key social media ETF (SOCL).