Snap Shares Drop 10% After Q3 Revenue and User Miss
Snap shares fell over 10% after third-quarter revenue and daily user growth fell short of Wall Street estimates, despite a return to net profitability.
Based on reporting by Paul Femi Balo (TechBooky) and Fedir Kryshtovskyi (UA.NEWS).
Snap shares fell by more than 10% in extended trading on Wednesday after the company reported third-quarter revenue and daily user figures that narrowly missed Wall Street expectations. Despite the market reaction, the Snapchat owner posted a quarterly net profit, reversing a loss from the previous year, and issued strong revenue guidance for the fourth quarter.
Key numbers from Snap's third-quarter report
According to reports from CNBC citing data from LSEG and StreetAccount, Snap's third-quarter performance featured several contrasting figures for Wall Street to digest:
Revenue: $1.72 billion, up 14% from the same period a year earlier, but below the $1.73 billion expected by analysts polled by LSEG.
Daily Active Users: 495 million worldwide, missing the 499 million estimate tracked by StreetAccount.
Net Income: $56 million, a sharp recovery from a net loss of $104 million in the third quarter of 2025.
Adjusted EBITDA: $383 million, beating the analyst estimate of $337 million cited by CNBC.
Average Revenue Per User: $3.48, which matched Wall Street forecasts.
For readers evaluating corporate financial statements, understanding how net profit and adjusted measures differ is essential; our Guide: How to Read an Earnings Report: A Beginner's Guide breaks down these non-GAAP metrics in detail. While Snap logged a 3-cent loss per share—a figure CNBC noted cannot be directly compared to analyst expectations—the overall quarterly performance reflected growth in ad and subscription revenues.
Audience metric pivot and long-term strategy
Alongside its headline financial numbers, Snap announced a significant shift in how it plans to report user growth. The company revealed it reached 977 million monthly active users in the third quarter and plans to make monthly active users its primary audience measure starting in the first quarter of 2027.
In a letter to investors, Snap explained that daily engagement has historically remained a stable portion of monthly activity. However, management stated that it does not intend to optimize the platform solely for daily usage if doing so comes at the expense of long-term community value and user safety. By shifting focus to monthly active users, Snap aims to provide a broader view of its overall reach, though investors will monitor whether less frequent users generate comparable advertising revenue.
The company has also continued to invest in longer-term bets beyond mobile devices, including artificial intelligence upgrades for its Specs augmented-reality glasses. However, the immediate share drop shows that market participants remain heavily focused on short-term audience metrics and headline sales figures.
What the earnings mean for investors and advertisers
The market reaction illustrates how sensitive technology stocks can be to small revenue and audience shortfalls, even when profitability improves. To understand how investor expectations drive share swings, read our Guide: What Moves Stock Prices? The 8 Biggest Drivers.
For investors, the report highlights a business balancing immediate financial delivery with long-term product decisions. Snap proved it can generate a net profit while expanding overall sales by 14%, but the initial sell-off confirms that short-term user growth expectations remain demanding. The company's fourth-quarter revenue guidance of $1.95 billion to $1.99 billion—with a midpoint above Wall Street's $1.95 billion expectation—suggests management remains confident about holiday advertising demand.
For advertisers and digital marketers, Snapchat's monthly user base of nearly 1 billion people underscores substantial global reach. However, as Snap transitions away from daily active user metrics as its primary benchmark, brands will need to evaluate whether shifts in user engagement habits affect ad conversion rates and return on ad spend.
What to watch next
In the coming quarters, key areas of focus for market analysts and industry observers will include:
Whether Snap achieves its fourth-quarter revenue targets of $1.95 billion to $1.99 billion and adjusted earnings of $490 million to $525 million, compared to Wall Street's $498 million estimate.
How advertising partners respond as Snap prepares to transition to monthly active users as its core reporting metric in 2027.
The performance of Snap's subscription offerings and ongoing progress in augmented-reality hardware.
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