Catch the free fall in the aftermarket – E24

The company expects a significant loss in operations in the current quarter. At the same time, the number of users increased.

The social media company generated revenue of $1.36 billion in the fourth quarter. This was slightly lower than the $1.38 billion that analysts had previously expected, according to Bloomberg.

The stock fell 26 percent in after-hours trading on Wall Street.

More users

Total operating profit (EBITDA) was $159 million for the quarter, down from $233 million in the same quarter last year.

Meanwhile, the company had 414 million daily users last quarter, which represents an increase of 10 percent or 39 million users last year.

Earnings per share were $0.08 compared to $0.14 in the fourth quarter of 2022.

Expect a big loss

Snap expects sales to reach between $1.095 billion and $1.135 billion in the first quarter, indicating annual growth of 11 to 15 percent.

Bloomberg links the sharp decline in shares to the fact that the company expects a much larger loss in operations in the first quarter than analysts expected.

The company expects total adjusted operating earnings (adjusted EBITDA) to reach $55 million to $95 million in the quarter. Analysts had previously estimated this would end at just negative $32.7 million.

Snap explains its expected loss of operations with the level of revenue it expects this quarter and the planned investments that will be made.

Job cuts

It became known on Monday that the company will get rid of about 10 percent of its workforce, according to a notification to the US Financial Supervision Commission (SEC).

The report stated that the cuts aim to position the company in the best possible way and ensure growth over time.

Snap expects costs between $55 million and $75 million related to severance and related costs.

In the quarterly report, the company wrote that it will downsize management and focus employees on specific locations that allow for more collaboration.