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Snap Inc. Report: A Melancholy Day for Big Stocks The Post-Earnings Fall: Snap Inc. and Other Big Stocks Hit a Slump

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By Ronald Tech

U.S. stock futures were mixed this morning, with the Dow futures trading almost flat on Wednesday.

The investment community woke to a chilly morning as shares of Snap Inc. plummeted in today’s pre-market trading following the release of its fourth-quarter results.

Snap’s fourth-quarter revenue inched up 5% year-over-year to $1.361 billion, a slight miss on the consensus estimate of $1.38 billion. The company did manage to report quarterly adjusted earnings of 8 cents per share, outstripping analyst estimates of 6 cents per share.

Despite the upbeat earnings, Snap’s guidance for the first-quarter revenue of $1.095 billion to $1.135 billion, vis-à-vis estimates of $1.12 billion, served as a wet blanket. The first-quarter adjusted EBITDA is expected to be between negative $55 million and negative $99 million, a revelation that seemed to significantly impact shares after hours.

Snap shares took a beating, dipping 31.3% to $11.99 in pre-market trading.

The pain was widespread as other major stocks suffered losses in today’s pre-market trading session.

  • fuboTV Inc. FUBO shares plummeted 11.2% to $2.23 in pre-market trading following a 4% gain on the preceding day.
  • Diversified Energy Company PLC DEC shares fell 9.9% to $11.69 in pre-market trading after a 12% gain previously.
  • New York Community Bancorp, Inc. NYCB shares fell 9.3% to $3.81 in pre-market trading. Moody’s downgraded New York Community Bancorp’s credit rating to junk.
  • Cognizant Technology Solutions Corporation CTSH shares tumbled 9.3% to $71.44 in pre-market trading following the company’s fourth-quarter results and guidance.
  • KKR Real Estate Finance Trust Inc. KREF shares dipped 8.8% to $10.74 in pre-market trading following fourth-quarter results.
  • Nyxoah S.A. NYXH fell 8.8% to $10.15 in pre-market trading.
  • V.F. Corporation VFC shares declined 7.8% to $15.63 in pre-market trading after the company reported worse-than-expected third-quarter financial results.
  • ePlus inc. PLUS shares fell 6.1% to $73.54 in pre-market trading after the company reported worse-than-expected third-quarter results.
  • Weibo Corporation WB shares fell 5.1% to $8.58 in pre-market trading after an 8% rise on the previous day.
  • Pinterest, Inc. PINS shares declined 4% to $39.41 in pre-market trading.
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In the vast economic landscape, customers display robust spending capacity, sparking a continuous cycle of economic vibrancy. As per a note by Deutsche Bank’s Binky Chadha on Sept. 12, both household and corporate balance sheets stand resilient, marking a departure from historical downturn patterns.

Despite the pointed references to the historically high absolute levels of debt in various news feeds, the critical metric remains the relationship between this debt and its serviceability, a capacity that presently boasts historical strength.

Even though surveys indicate a prevailing pessimism among consumers and business managers, the hard data underscores a different narrative - one of consistent spending patterns, possibly propelled by their sturdy financial foundations.

A Decoupling of the Stock Market from Political Factors

The conventional narrative linking Donald Trump's policy stance to favorable stock market outcomes has hit a snag. Recent observations by RBC’s Lori Calvasina, dated September 23, underscore this break in correlations.

While the divergence may seem unusual, historical instances reveal a similar trend. Despite changes such as corporate tax reforms that initially raised tax rates, businesses managed to recalibrate their strategies, leading to sustainable earnings growth and subsequent stock price appreciation.

The Unyielding Power of Compound Interest

A revelatory insight into market behavior under different presidencies unveils a profound truth - investors who remained steadfast regardless of the political climate outperformed those who based their investment decisions on party affiliations. BlackRock’s Gargi Chaudhuri reinforces this point by emphasizing the unparalleled significance of staying invested in the market, attesting to the magnified benefits of long-term commitment.

U.S. Companies: A Testimony to Success

Borrowing an idea from Mario Draghi’s discourse on European competitiveness, Deutsche Bank’s Jim Reid sheds light on a striking dichotomy between U.S. and European enterprises. The noteworthy absence of a European firm, with a valuation exceeding €100 billion and established in the last 50 years, further accentuates the exceptional growth trajectory of U.S. corporations.

As noted in a previous article on TKer, the U.S. market's superior performance can be attributed to various factors such as a culture of innovation, business-friendly regulations, and robust corporate governance practices.

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