Snap Stock Slides After it Misses Expected Earnings

Snap Inc. stock dropped more than 10% on Tuesday after it reported earnings that missed analysts expectations for Q4.

The self-described camera company, based in Santa Monica, reported revenue of $561 million versus the expected $563 million. The company's reported cash flow remains negative despite improvement over the year prior. The company said it lost $240.7 million, or 17 cents per share, compared with FactSet estimates of a 12-cent loss per share.


It reported a full year increase of 17%, or an additional 31 million, daily active users in 2019 compared to last year. The company, which is the maker of the Snapchat app, said it continues to invest in augmented reality platforms with 75% of its community engaging with AR on average daily. Snap also recently launched its new Bitmoji TV on Feb. 1, capitalizing on the popular Bitmoji Stories.

Snap reported that it expects revenue in Q1 of 2020 to be between $450 million and $470 million. That's above analysts expectations of $462 million.

Snap is up roughly 160% from last year, with a 52-week high $19.75 from its low of $6.80.

During Tuesday's earnings call, CEO and co-founder Evan Spiegel told analysts that the company was continuing to invest in its curated Discover page content.

"There are really interest shifts in content consumption," from television to mobile, Spiegel said. "Content hasn't caught up to this behavior shift (yet)."

Short-form video has taken off, especially with Gen Z, with youths moving into houses in Los Angeles, for example, specifically to generate TikTok videos as sponsored social media influencers. Meanwhile, soon-to-be launched, Quibi, or "quick bites," founded by Jeffrey Katzenberg and with CEO Meg Whitman is betting that bespoke episodic weekly videos that are under 10 minutes will take off.

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