Snap (NYSE:SNAP) stock is now up slightly today in volatile trading after the social media company issued disappointing earnings.
The company behind the popular Snapchat platform reported an earnings per share (EPS) loss of 2 cents versus estimated earnings of 1 cent. Snap’s quarterly revenue amounted to $1.06 billion compared to $1.07 billion that analysts expected.
So far this year, SNAP’s share price has declined 35%.
What Happened With SNAP Stock
Snap announced that its global daily active users (DAUs) totaled 332 million in this year’s first quarter compared to the 330 million that Wall Street expected. In addition to beating estimates, this users figure was up 18% year over year. Also, Snap’s average revenue per user (ARPU) was $3.20, up 16.8% year over year. ARPU did come in below estimates for $3.25.
However, while Snap’s overall revenue increased 38% year over year, the company reported a bigger net loss and less free cash flow on an annual basis during the quarter that ended March 31.
Perhaps worse, Snap said it expects that its Q2 revenue will rise between 20% and 25%, which is lower than Wall Street’s estimate of 28% growth. Those numbers have SNAP stock under pressure today.
Why It Matters
Like most technology stocks and other companies that thrived during pandemic lockdowns, Snap has been struggling since the market began to turn downwards last November. The latest financial results add to the negative sentiment surrounding not only SNAP stock, but other social media and technology securities.
Snap attributed much of its poor Q1 results to ongoing problems it is experiencing with Apple’s (NASDAQ:AAPL) 2021 privacy change that makes it harder to target and measure ads on iPhones. Snap said that a new tool it created to improve the issue “now accounts for 90% of the company’s direct response advertising revenue.”
What’s Next for Snap?
Snap’s latest numbers are not inspiring steady confidence in the company. Going forward, Snap will need to achieve profitability and demonstrate consistent positive earnings if it hopes to turn things around.
On the date of publication, Joel Baglole held a long position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.