Snap’s Earnings Could Be Volatile: Stock Under Pressure Leading In, What To Expect

Snap's stock price (NYSE: SNAP) is moving lower today, down 1.74% at $9.30, as markets brace for Q2 earnings after the closing bell.

The stock has been under pressure this year, down 17% YTD, and markets are looking for catalysts for a turnaround in the print.

Analysts are projecting an earnings per share (EPS) of $0.02 for the quarter, matching that from last year, yet a decline on the $0.08 in the most recent period.

Revenue expectations are set at $1.35 billion, representing an 8.8% year-over-year growth rate. This anticipated growth is crucial, as Snap needs to demonstrate its ability to attract and retain advertising dollars in an increasingly competitive digital advertising landscape.

The average analyst price target for Snap currently stands at $9.88, suggesting upside potential from here of ~6%.

Snap's first-quarter 2025 results offered a mixed bag. Revenue reached $1.36 billion, a 14% increase from the previous year. Adjusted EBITDA also showed improvement, rising to $108 million from $46 million. Daily active users (DAUs) climbed to 460 million, a significant 38 million increase year-over-year.

However, the market reacted negatively to the results, with the stock dropping 12.54% in after-hours trading, largely attributed to management's decision not to provide formal guidance for the upcoming quarter, citing macroeconomic uncertainties.

Advertising revenue, a crucial indicator of Snap's financial health, grew by 9% year-over-year to $1.21 billion in Q1 2025, primarily fueled by direct response advertising. The Snapchat+ subscription service also showed promise, reaching 15 million subscribers and contributing to a 75% year-over-year increase in “Other Revenue” to $152 million.

Analyst sentiment surrounding Snap remains mixed. While some acknowledge the company's revenue growth and user engagement metrics, concerns persist about profitability and the impact of macroeconomic factors on advertising demand. There has been one upside EPS revision in the month leading into today's earnings, matched by one analyst shifting to the downside. Finely balanced, with volatility likely.

Options markets seem to be pricing in a 50% chance that the move on earnings could be as high as 20%.

The company's ability to sustain revenue growth, expand its user base, and potentially reinstate guidance could prove pivotal for the next leg.