Snap Inc.’s big turnaround took a big hit on Tuesday afternoon with the company’s stock price diving 13% after it narrowly fell short of Wall Street’s fourth-quarter revenue estimates. The miss on Q4 sales overshadowed the Snapchat parent company turning a profit on an adjusted basis.
For Q4, Snap reported sales increased 44% year-over-year to $560.9 million, coming in a few million dollars below analyst projections. Snap’s earnings of 3 cents per share, on the other hand, topped estimates of 1 cent EPS.
Still, missing on its Q4 sales looked to be the catalyst for Snap’s stock dropping 13% in early after-hours trading, going from about $19 per share to $16.50 per share.
Snapchat added 8 million new users — up 17% year-over-year — but it apparently wasn’t enough to offset Wall Street’s dissatisfaction with its Q4 sales. Overall, Snapchat closed 2019 with 218 million daily active users. Following a dismal 2018, where a botched revamp of its Android app contributed to Snapchat losing a few million users, Snapchat added 32 million users last year.
“The strength in our core business gives us confidence in our long term growth and profitability and we’re excited to build on these results in 2020 and beyond,” Snap chief executive Evan Spiegel said in a statement.
A one-time legal fee contributed to Snap’s quarterly loss increasing to $240.7 million; the company posted a loss of about $192 million during the same period last year.
Snap said its increased focus on content has been paying off, with about 50 shows pulling in at least 10 million viewers each month. The time users are spending watching Snapchat content increased 35% year-over-year, Snap added in its letter to shareholders. Average revenue per user increased 23% year-over-year to $2.58.
Heading into Tuesday afternoon, Snap had been one of the best-performing companies on Wall Street in the last year, increasing more than 100% in value since early February 2019.