Snap Stock Dives On Disappointing Q4 Sales, Soft 2024 Outlook—Key Price Levels to Watch

Snap Inc.

Shares in Snap (SNAP) plunged more than 30% in premarket trading Wednesday after the parent of instant messaging app Snapchat reported top-line numbers that came in below analysts’ expectations and issued a soft outlook for the current quarter as the conflict in the Middle East has contributed to slower digital advertising.

The company’s fourth-quarter revenue of $1.36 billion increased 5% from a year earlier but missed Wall Street’s expectation of $1.38 billion, marking the sixth consecutive quarter the Santa Monica, California-based company has reported single-digit growth or sales declines. Snap said the ongoing war between Israel and Hamas contributed to the weaker-than-expected revenue during the period.

“While we are encouraged by the progress we are making with our ad platform and the improved results we are delivering for many of our advertising partners, we estimate that the onset of the conflict in the Middle East was a headwind to year-over-year growth of approximately 2 percentage points in Q4,” Snap wrote in an investor letter.

On a brighter note as the company looks for additional avenues to monetize its platform, Snap said that its Snapchat+ subscription service, which provides users with early access to features, added 2 million subscribers during the fourth quarter, taking its total paid user count to 7 million.

Looking ahead, the company’s first-quarter revenue guidance range of $1.095 billion to $1.135 billion represents growth of 11% to 15% over last year’s corresponding quarter, though the midpoint of that band still falls short of the $1.117 billion Street forecast.

Snap’s softer-than-anticipated earnings report comes a day after the company joined a legion of other tech giants by announcing that it plans to trim its global workforce by 10%, or around 500 staff. The headcount reduction follows the company cutting its full-time workforce by 20% in August 2022.

Since bottoming out at around $8.50 in late September, SNAP trended higher for several months before tracking sideways into the 50-day moving average. During this post-earnings sell-off, monitor if the stock’s price can hold above the key $12 level. This area on the chart finds a confluence of support from a multi-month horizontal trendline and the rising 200-day moving average.

SNAP was down 31.3% at $11.99 about three hours before Wednesday’s opening bell.

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As of the date this article was written, the author does not own any of the above securities.