Shares of Snap Inc. fell more than 15% on Wednesday after the company chose not to issue guidance for Q2, citing macroeconomic uncertainty and its potential negative impact on advertising demand.
In its earnings statement released Tuesday, Snap noted:
"While our revenue continues to grow, we’ve encountered some headwinds early this quarter.
We believe it's prudent to align our investment levels with the pace of revenue growth, especially in a climate where ad budgets may be pressured."
Advertisers React to Incoming De Minimis Policy Changes
During the earnings call, CFO Derek Andersen said some advertisers were already reacting to anticipated changes to the de minimis exemption—a rule that currently allows shipments under $800 to enter the U.S. tariff-free. The exemption is set to expire on Friday, adding further pressure to advertiser confidence.
Ad Spend Slowdown Fears Cloud Outlook
Snap’s caution comes as broader fears of an economic slowdown grow across corporate America. Many companies are expected to cut advertising budgets, Snap’s primary revenue stream, in response to tightening conditions and tariff volatility tied to the Trump administration’s trade policy shifts.
Despite withholding forward guidance, Snap reported 14% year-over-year revenue growth, reaching $1.36 billion, up from $1.19 billion a year ago.
Net losses narrowed by 54% to $140 million (8 cents per share), compared to $305 million (19 cents) last year, thanks in part to $70.1 million in restructuring charges related to severance, stock compensation, and operational changes.
User Growth Globally, Small Dip in North America
The company’s global daily active user base climbed to 460 million, up from 453 million the previous quarter. Monthly active users reached 900 million, compared to 850 million in August.
However, North American daily users fell from 100 million to 99 million, though Snap said it expects that number to remain stable through the current quarter.
Analyst Outlook: Low Valuation, High Caution
Bank of America analyst Justin Post commented:
"Snap’s price-to-sales ratio is near historical lows, which could offer valuation support. However, we maintain a neutral rating, given the company’s higher sensitivity to economic downturns compared to peers."
