What happened?
Shares of social network Snapchat (NYSE: SNAP) fell 13.1% in the afternoon session after the company reported third-quarter revenue and daily active users below analyst estimates. According to the company's release, revenue was $1.72 billion, below the $1.73 billion estimate, even though sales were higher than a year ago. Daily users reached 495 million, below the 499 million estimate, and were also higher than a year ago. Profit topped estimates, and the company swung to a profit from a loss. The shares fell on the misses in sales and users.
The shares closed the day at $5.08, down 14% from the previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Snap? Access our full analysis report here, it’s free.
What is the market telling us
Snap’s shares are extremely volatile and have had 37 moves greater than 5% over the last year. But moves this big are rare even for Snap and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 22 days ago when the stock dropped 4.2% on the news that the major indices pulled back and tech-oriented equities fell as the Bureau of Labor Statistics reported a hotter-than-expected September inflation print, pushing Treasury yields higher. As detailed by the Bureau of Labor Statistics, the consumer price index rose 3.7% year-over-year in September, topping the 3.6% estimate from economists polled by Dow Jones. According to CNBC, core inflation—which excludes volatile food and energy costs—climbed 2.6% annually against expectations of 2.5%. Following the print, CNBC market data showed the 10-year Treasury yield climbed over six basis points to 5.278%, while the 30-year yield advanced past 5.59%. According to market commentators, rising yields intensify pressure on equity valuations as third-quarter corporate earnings get underway. In remarks carried by CNBC, Franklin Templeton Institute head investment strategist Jeff Schulze noted that pressure across the long end of the curve acts as a severe valuation headwind for risk assets. Financial analysts explain that higher benchmark yields mechanically elevate the discount rate applied to corporate earnings, compressing the multiples investors are willing to pay for equities. Ultimately, CNBC noted that when sticky inflation dampens expectations for monetary easing, the repricing falls heaviest on high-multiple growth and gig-economy sectors whose projected cash flows sit furthest in the future.
Snap is down 37.7% since the beginning of the year, and at $5.07 per share, it is trading 44.3% below its 52-week high of $9.09 from November 2025. Investors who bought $1,000 worth of Snap’s shares 5 years ago would now be looking at only $95.26.
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