Snap spooks investors with talk of ‘headwinds’

Nathan Jolly

April 30, 2025 9:37

Snap spooks investors with talk of ‘headwinds’

Snap has seen its share price drop by 14% overnight after the company informed investors of headwinds from an uncertain advertising climate during its first-quarter earnings call.

Snap declined to offer formal financial guidance for the current quarter in its investor report, citing “uncertainty with respect to how macro economic conditions may evolve in the months ahead, and how this may impact advertising demand more broadly.”

“We believe it is prudent to continue to balance our level of investment with realised revenue growth.”

In line with this, the company is cutting $50 million (A$78.31m) from its yearly operating expenses.

Despite not offering guidance, Snap says it “remains optimistic about the long term prospects for our business”, citing an improved ad platform, and a diversified advertiser base.

The stock market wasn’t convinced, with after hours trading seeing Snap’s stock drop sharply.

Aside from the uncertain forecast, most indicators are good for Snap Inc.

Revenue has risen 14% year-on-year, to $1.36 billion (A$2.13b). Advertising has risen by 60% year-on-year, with three-quarters of this spend being on ‘direct response’ advertising (ads that prompt an action, such as a clickthrough). Paid subscriptions for Snapchat+ are up 59%, to 15 million globally, with the app now drawing 900 million monthly active users.

The company still runs at a loss, albeit a significantly reduced one – losing $140 million (A$220m) for the quarter, compared to $305 million (A$478m), a year prior.

With 1.36 billion in revenue, its 900 million monthly users each generated just US$1.50 for the quarter. That is a fraction of competitor platforms.

For example, Meta will release its first-quarter earnings over night, which Bloomberg estimates will sit at $40.5 billion ($63.4b) for its family of apps. With a global monthly user base of 3.98 billion across Facebook, Instagram, and Whatsapp, Meta is generating over US$10 per user.

Co-founder and CEO Evan Spiegel struck an upbeat note in the media release, noting the revenue increase, and “the progress we have made with our direct-response advertising solutions, continued momentum in driving performance for small and medium sized businesses, and the growth of our Snapchat+ subscription business.”