What Happened?
Shares of social network Snapchat (NYSE: SNAP) fell 17.6% in the morning session after the company reported mixed first-quarter 2025 results: its revenue narrowly outperformed Wall Street's estimates, and its free cash flow missed. The key concern was the lack of near-term guidance, with the company citing macro uncertainty. On a more positive note, Snap blew past analysts' EPS and EBITDA expectations. Overall, we think this was a decent quarter, with some key metrics above Wall Street's expectations. The market seemed to focus on the negatives.
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What The Market Is Telling Us
Snap’s shares are very volatile and have had 25 moves greater than 5% over the last year. But moves this big are rare even for Snap and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 22 days ago when the stock dropped 7.1% as markets gave up early gains with optimism over progress in US-China trade talks quickly fading as the Trump administration announced plans to raise tariffs on all Chinese imports to well above 100%. Hopes had been lifted by chatter of constructive negotiations aimed at easing and eventually removing U.S. trade tariffs. But the news confirmed fears of a prolonged trade fight, increasing uncertainty about the direction of economic policy. This left investors grappling with the dual threat of slower growth and higher inflation, both of which could linger if the standoff continues.
Snap is down 30.6% since the beginning of the year, and at $7.80 per share, it is trading 54.5% below its 52-week high of $17.14 from May 2024. Investors who bought $1,000 worth of Snap’s shares 5 years ago would now be looking at an investment worth $442.65.
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