New York, February 5, 2026, 14:49 EST — Regular session.
- Snap shares dropped roughly 12% in afternoon trading following a weak revenue outlook for the first quarter.
- The Snapchat owner posted an unexpected quarterly profit and greenlit a $500 million share buyback.
- Wall Street’s response was mixed, as a handful of target cuts balanced out an upgrade elsewhere.
Snap Inc shares dropped roughly 12% to $5.21 in Thursday afternoon trading. The Snapchat parent’s first-quarter revenue forecast fell below estimates, prompting a sell-off following the company’s report.
This shift is crucial as Snap pushes for “profitable growth” amid pressure from advertisers and investors who want firmer evidence that ad spending is leveling off. Right now, guidance is carrying more weight than the holiday-quarter results.
Snap’s business remains heavily reliant on advertising, locked in a battle with giants like Meta and TikTok for marketing dollars that can vanish quickly. Early warnings about tight big-brand spending usually surface in forward revenue projections.
Snap projects first-quarter revenue between $1.50 billion and $1.53 billion, falling short of analysts’ $1.55 billion forecast, according to LSEG data. Adjusted EBITDA, which excludes costs like interest and depreciation, is expected to hit $170 million to $190 million, beating estimates. However, the company’s guidance doesn’t factor in potential revenue from a Perplexity integration that hasn’t been cleared for wider deployment. “The ads platform still has a long way to go in attracting big budgets from enterprise advertisers,” said Emarketer analyst Max Willens. (Reuters)
Snap reported a 10% rise in fourth-quarter revenue, hitting roughly $1.716 billion, with net income coming in around $45 million. Its board approved a $500 million share buyback plan over the next 12 months, tapping existing cash to counteract dilution from employee stock awards. The company finished the year with $2.9 billion in cash, cash equivalents, and marketable securities. CEO Evan Spiegel said the results “began to reflect the impact of our strategic pivot toward profitable growth” in the earnings release. (Snap Inc. Investor Relations)
Analyst reactions varied following the report. B. Riley’s Naved Khan raised Snap to a buy from neutral, maintaining a $10 price target. On the other hand, Canaccord Genuity’s Maria Ripps and Wells Fargo’s Ken Gawrelski lowered their price targets, citing ongoing doubts about ad growth and tough competition from bigger players. (Barron’s)
U.S. stocks fell broadly, led by tech shares, as investors grew wary of artificial intelligence-related spending. “This is the first time we’ve seen the large-cap tech companies … go through a really large capex cycle,” said U.S. Bank Wealth Management strategist Tom Hainlin, highlighting the increased volatility over whether that investment will deliver returns. (Reuters)
Snap had some clear wins this quarter — subscriptions rose, and the company highlighted upgrades to its ad tools and formats. Yet, investors are zeroing in on the short-term revenue figures and what’s happening with bigger ad budgets.
The risk flips if advertisers hold back and Snap can’t capture enterprise spending on a large scale. Any delays in forming new partnerships or a drop in engagement could put that first-quarter forecast in jeopardy, despite efforts to tighten costs.
Snap announced Thursday that it has filed its annual report on Form 10-K for the year ending Dec. 31, 2025. The company has made its audited financial statements accessible to investors via the SEC and its investor website. (Business Wire)
Traders are set to focus on ad demand trends this quarter, while also seeking updates on when Perplexity will fully launch and how quickly buybacks will proceed.
Macro developments also play a role. The U.S. Bureau of Labor Statistics announced the January jobs report is now set for Wednesday, February 11, while the January CPI data has been pushed to Friday, February 13. This shift comes after a government shutdown disrupted the schedule — and both reports could heavily influence rate outlooks and, in turn, growth stocks sensitive to advertising. (Reuters)
