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After initially soaring on Q4 results during yesterday's after-hours session, Snap (SNAP -7%) quickly snapped back, opening lower today with selling pressure continuing to mount. The social media platform's Q4 results were solid, posting a beat on its top and bottom lines, surpassing its daily active user (DAU) guidance, and projecting Q1 revenue mostly above consensus, incorporating another uptick in DAUs.

So why did selling pressure quickly ensue? SNAP is a volatile stock, often experiencing swings of mid-to-high single-digit percentages without any market-moving events. It also does not help that SNAP caught a downgrade today at Wells Fargo. Meanwhile, there were a few weak spots in SNAP's guidance. The company's DAU outlook for Q1 of approximately 459 mln represents an 8.8% increase yr/yr, a minor slowdown in growth compared to Q4, when DAUs grew by 9.4% yr/yr to 453 mln, consistent with growth over the previous two quarters. Also, even though the midpoint of SNAP's Q1 revenue forecast of $1.325-1.360 bln edged past analyst expectations, it marks another quarter of weakening revenue growth, translating to a 12.4% jump versus a 14.4% increase in Q4, 15.4% in Q3, 15.8% in Q2, and 20.9% in Q1.

• There was still plenty to like from SNAP in Q4. The company delivered GAAP EPS of $0.01, exceeding analysts' more bearish expectations of another net loss. It also marked SNAP's first quarter of GAAP profitability in three years, a headline that may have initially triggered a wave of buying support.
• Revenue of $1.56 bln was underpinned by SNAP's continuous progress with its Direct Response (DR) advertising business and the growth of its Snapchat+ subscription offering. For the year, DR ad revs expanded by 16% yr/yr while Snapchat+ doubled its subscriber base to 14 mln, pushing revenue 131% higher and comprising around a tenth of total revenue.
• Looking at 2025, SNAP is focused on a few key initiatives to build on its momentum from 2024. Advertising will be its main focus, touting new ad placements to provide advertisers with incremental reach. SNAP is also improving its go-to-market approach by offering actionable insights to ad partners and introducing automated campaign tools. Other initiatives involve enhancing its app and advancing its ML infrastructure to drive better ad interactions.
• SNAP is also committed to returning users to its platform following some engagement losses over the years, particularly with its Stories page. Management mentioned it has several ideas that it will work on rolling out in the coming weeks and months. Furthermore, SNAP mentioned that there could be some room for price hikes within its Snapchat+ offering, helping boost ARPU.

Even though SNAP is trading markedly lower today, its shares remain range-bound. The market is likely waiting for a more encouraging outlook from SNAP before supporting a more sustained rally above previous $13.00 resistance. As such, while SNAP may experience relatively aggressive swings over the near term, it could stay stuck in a range until brighter horizons appear.