Snap plunges 13% as UBS downgrades, citing competition increasing 'everywhere'
Carl Court/Getty Images News

Snap (NYSE:SNAP) shares fell more than 13% Wednesday after the camera and social network company reported fourth-quarter results and issued weak guidance, prompting investment firm UBS to downgrade the Evan Spiegel-led company.
Analyst Lloyd Walmsley lowered his rating to neutral from buy and kept the per-share price target of $10, noting that even though there is the potential for revenue acceleration, the company is in a more competitive space than it's ever been.
Walmsley said that while much social media and advertising attention has been put on TikTok of late, Meta (META) is benefitting from ramping up the monetization of Reels. Walmsley also noted that with YouTube scaling up video Shorts atop is Google (GOOG) (GOOGL) ad platform and Snap (SNAP) having a smaller scale of growth, there is a risk to sales accelerating in the coming months.
Additionally, Walmsley said that Snap's (SNAP) poor results and outlook do not bode well for the online ad space, especially Pinterest (PINS).
For its fourth-quarter, Snap (SNAP) earned 14 cents per share, excluding one-time items, on flat revenue of $1.3B. Analysts were expecting an adjusted gain of 12 cents per share on $1.31B in revenue.
The company had 375M daily active users at the end of the period, up 17% year-over-year, but that did not translate into revenue growth.
Snap (SNAP) didn't give formal first-quarter guidance, but said in an investor letter that its internal forecast is for revenues to fall between 2% and 10% on a year-over-year basis, and "we've observed a year-over-year decline in revenue of approximately 7% quarter-to-date."
Other social media stocks fell on back of the report, including Pinterest (PINS) and Meta (META), which is slated to report fourth-quarter results after the close of trading on Wednesday.
On the company's earnings call, Snap (SNAP) CEO Spiegel said any improvements the company has made recently will take some time to start generating revenue.
Analysts are largely cautious on Snap (SNAP). It has a HOLD rating from Seeking Alpha authors, while Wall Street analysts rate it a HOLD. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates SNAP a HOLD.