Snap Inc. (NYSE:SNAP) stock climbed in Tuesday’s premarket trading, recovering following last week’s fourth-quarter earnings report that showed profitability gains despite ongoing competitive headwinds in digital advertising. Snap fell more than 10% last Thursday.
Earnings Beat Estimates
The social media company reported fourth-quarter earnings of 3 cents per share on Feb. 4, topping consensus estimates for a 3-cent loss. Revenue rose 10.2% year over year to $1.72 billion, beating analyst expectations of $1.70 billion.
“Our Q4 results began to reflect the impact of our strategic pivot toward profitable growth, translating into revenue diversification and meaningful margin expansion,” said CEO Evan Spiegel.
User Engagement Shows Mixed Signals
Daily active users fell to 474 million in the fourth quarter, down from 477 million in the third quarter.
However, global monthly active users reached 946 million, an increase of 51 million or 6% year over year.
The company reported a 47% year-over-year increase in U.S. Snapchatters posting to Spotlight, while Spotlight reposts and shares jumped 69% year over year.
Analyst Flags Competitive Pressure
Citizens analyst Andrew Boone maintained a Market Perform rating on Feb. 5, noting that Snap’s advertising growth remains modest as it continues to lose share to AI-driven rivals, including Meta Platforms, Inc. (NASDAQ:META), Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL), Applovin Corporation (NASDAQ:APP) and TikTok. Boone said stronger AI-powered content recommendations from competitors are challenging Snap’s ability to retain user attention and defend advertising share.
Looking Ahead
Boone highlighted Snap’s planned 2026 launch of Specs as a potential differentiated, mass-market AI glasses platform and noted a newly authorized share buyback supported by balance sheet strength.
SNAP Price Action: Snap shares were up 4.05% at $5.40 during premarket trading on Tuesday, according to Benzinga Pro data.
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