Snap (NYSE:SNAP), which runs the popular social media app Snapchat, just released financial results for 2022’s first quarter. It was potentially a make-or-break event as SNAP stock was already on a steep downtrend.
The stock got slammed on the day of the earnings release, and then again slid the next day. Did Snap perform poorly enough to justify this share-price drawdown?
Bear in mind, investors were also dumping technology stocks during this time. So, SNAP stock may have suffered from collateral damage.
Besides, the company didn’t fare badly during the fourth quarter of 2022. For example, Snap grew its “community” of users 18% year-over-year, to 332 million. Reportedly, the Wall Street consensus expectation was for 331 million, so Snap can claim a slight beat there.
Furthermore, Snap increased it revenue 38% year-over-year, to $1.06 billion in Q2, 2022. This result was roughly in line with Wall Street’s expectation, so there’s nothing to complain about here.
Snap CEO Evan Spiegel celebrated these results, saying, “Our first quarter results reflect the underlying momentum in our business through a challenging operating environment.”
He’s making a valid point here. Supply-chain issues have wreaked havoc on many tech-focused businesses lately. Yet, Snap still managed to demonstrate user-base and revenue growth.
In the interest of full disclosure, we must also acknowledge Snap’s bottom-line disappointment. Specifically, the company posted a Q2, 2022 net earnings loss of $360 million, versus $287 million in the prior-year quarter.
That’s disappointing — no doubt about it. However, the net loss seems to reflect Snap’s spending in targeted areas, such as growing the platform’s content offerings and expanding Snap’s product and partner ecosystem.
Irrespective of the fiscal stats, it’s evident that Snap is growing its business. For instance, Snap recently expanded its global content offerings by “partnering with News UK, TF1 and Le Monde in France, and MBC and Al Arabiya in the Middle East.”
That’s a positive sign, and investors’ reaction to Snap’s earnings report may have been the wrong one. Therefore, it’s a great time to snap up some shares at a reduced price, before Wall Street comes back to its senses.
On the date of publication, David Moadel did not have (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.
