Snap Stock Is Tumbling on Disappointing Earnings

Snap reported earnings after the market closed on Tuesday. (Brent Lewin/Bloomberg)

Shares of Snap were falling sharply Wednesday after the social-media company reported worse-than-expected second-quarter financial results.

The Snapchat parent posted a second-quarter loss of 16 cents a share on revenue of $1.345 billion. Analysts surveyed by FactSet had expected the company to lose 15 cents a share on revenue of $1.35 billion.

Snap also said daily active users in the quarter increased 9% from last year to 469 million, beating Wall Street estimates of 467.4 million. But average revenue per user of $2.87 missed estimates of $2.89.

The company also said it expects third-quarter revenue of $1.475 billion to $1.505 billion, compared with analyst estimates for $1.48 billion. That outlook comes after the company didn’t provide second-quarter guidance when reporting first-quarter numbers due to the economic uncertainty of tariff policies that had just begun to roll out at the time.

“Against a backdrop of very resilient Net sector ad revenue results and what were thought to be de-risked estimates, this was a surprisingly soft print,” Evercore ISI analyst Mark Mahaney wrote in a note on Wednesday. He raised the price target on Snap stock to $12 from $11, and has an In Line rating.

Meta Platforms, Alphabet and Reddit all reported strong second-quarter revenue growth in July as digital advertisers continued to spend on those platforms.

“Our rate of top-line growth was impacted by a number of factors in Q2,” Snap management said in a letter to investors. Some of those factors included issues with the company’s ad platform and updates to the de minimis exemptions.

The de minimis exemption had previously allowed lower-cost packages to enter the U.S. without being subject to tariffs. President Donald Trump has ended the exemption as he raises tariffs on some of the U.S.’s largest trading partners.

As the cost to import goods rises, companies may choose to cut back their advertising budgets or focus spending on platforms with the most users.

Shares were down 19% to $7.58 on Wednesday and were on pace for their largest percentage decrease since Aug. 2, 2024, according to Dow Jones Market Data. The stock is now down 30% this year.

Write to Angela Palumbo at angela.palumbo@dowjones.com