Snap Stock Cedes Gains as Q3 Revenue Comes Up Short

Wednesday’s extended session saw Snap Inc. (SNAP) shares tumble 11.46% to $5.24, after closing at $5.92. The Snapchat owner delivered a profit and an outlook ahead of consensus, though revenue and daily-user numbers fell short.

That move erased the stock’s 5.81% gain from regular trading, when the shares climbed from the prior close of $5.60.

Profit Tops Forecasts; Revenue Just Misses

Snap generated third-quarter revenue of $1.72 billion, up 14% from $1.51 billion in the same period last year. That was just under the $1.73 billion that analysts had penciled in, according to LSEG.

Net income came to $56 million, compared with a $104 million loss in the year-ago quarter. Adjusted earnings per share reached $0.19, beating the $0.16 that was expected.

Adjusted EBITDA — earnings before interest, taxes, depreciation and amortization — more than doubled to $383 million from $182 million. StreetAccount had forecast $337 million.

For the fourth quarter, Snap projected revenue of $1.95 billion to $1.985 billion. The midpoint of that range sits above the $1.95 billion Wall Street estimate, CNBC reported. The company forecasts adjusted EBITDA of $490 million to $525 million, versus a $498 million projection.

Ad Growth Trails Subscriptions as Snap Changes Audience Metric

Inside the revenue number, Snap’s two main businesses expanded at very different speeds. Advertising revenue rose 4% in Q3, while subscription-led other revenue jumped 84%. Snapchat+, Memories Storage and Lens+ surpassed 30 million paid subscribers.

Chief commercial officer Ronan Harris said weaker spending from consumer packaged goods (CPG) companies weighed on third-quarter revenue. He attributed the cutback to macroeconomic pressures in the US and the Middle East, and pointed to other ad verticals instead.

“As we look ahead, we’re seeing very positive signs of growth from diversified verticals like financial services in the U.S.,” he said.

The user numbers were the other shortfall. Snapchat counted 495 million daily active users, below the 499 million StreetAccount projected, while monthly active users hit 977 million.

Beginning with its Q1 2027 report, Snap will make monthly active users its primary audience metric and stop reporting global daily users. Regional daily-user counts and regional average revenue per user (ARPU) will also disappear from disclosures. ARPU itself will continue to be reported, but recalculated based on monthly users.

Daily activity remains significant, the company said, but it will no longer be Snap’s primary gauge of long-term value. CEO Evan Spiegel, meanwhile, said Snap’s augmented-reality investment continues with the SPECS launch.

Snap’s Q4 update will show whether financial services and other ad categories can make up for softer packaged-goods spending.