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Snap Beats Profit Estimates on Advertising Platform Strength

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Snap Inc. (SNAP) exceeded Wall Street’s quarterly profit expectations on Tuesday, benefiting from significant improvements to its advertising platform. This growth helped boost its shares by 6% in after-hours trading. Amid growing uncertainty about a potential ban of TikTok in the U.S., analysts believe Snap could capitalize on the situation.

CEO Evan Spiegel stated that the uncertainty surrounding TikTok has been beneficial to Snap, as advertisers are focused on diversifying their ad spend and contingency planning. Snap is also considering increasing the price of its Snapchat+ subscription service to further raise its average revenue per user. The company reported a significant jump in Snapchat+ subscribers, which doubled to 14 million in the fourth quarter.

Snap has been heavily investing in artificial intelligence and machine learning tools to create more personalized ads. A notable shift in its strategy has been an emphasis on direct response ads, designed to prompt specific actions like app downloads or website visits, particularly as brand awareness ads show signs of weakness. These efforts have allowed Snap to tap into small- and mid-sized businesses, which have become the largest contributors to the company’s advertising revenue growth in 2024.

The company is also planning to expand its advertising formats, such as Sponsored Snaps (video ads in users’ inboxes) and Promoted Places (business location highlights on Snap Map), into additional markets.

“Snap’s diligent work on its ad platform and diversifying its revenue streams through subscriptions have paid off,” said Jasmine Enberg, principal analyst at eMarketer.

Snap reported adjusted earnings per share of 16 cents for the fourth quarter, surpassing analysts’ average estimate of 14 cents. The company also saw a 9% increase in daily active users, reaching 453 million, slightly surpassing the expected 450.8 million. For the first quarter of 2024, Snap forecasts revenue between $1.33 billion and $1.36 billion, with adjusted EBITDA expected to range between $40 million and $75 million, which is slightly below analyst expectations of $78.1 million.

Quarterly revenue rose 14% to $1.56 billion, marginally surpassing the average forecast of $1.55 billion.

 

Intel’s Quarterly Revenue Tops Expectations, Investors Await New CEO

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Intel (INTC.O) reported better-than-expected results for its December quarter on Thursday, surpassing analysts’ low estimates. However, the chipmaker’s forecast for the upcoming quarter fell short, as it faces weak demand for its data center chips. Investors are also awaiting clarity on Intel’s leadership following the ousting of former CEO Pat Gelsinger last month. Currently, two interim co-CEOs are at the helm of the company, which has struggled to compete with rivals like Nvidia (NVDA.O), particularly in the AI chip market.

The quarterly results were overshadowed by concerns about Intel’s long-term strategy and leadership transition. Despite this, the company’s shares rose by 3.8% in after-hours trading, a relief after a challenging year where Intel’s stock lost around 60% of its value.

Intel’s struggle to capitalize on the booming AI market was evident when Co-interim CEO Michelle Johnston Holthaus announced that the company would shelve its upcoming graphics processing unit (GPU) design, Falcon Shores. Instead, Intel plans to use the chip internally as a test product, with a focus on future data center AI chips.

For the first quarter, Intel projected revenue between $11.7 billion and $12.7 billion, below analysts’ average estimate of $12.87 billion. The company cited “normal seasonality” and potential tariffs under the Biden administration as factors contributing to its cautious outlook. According to CFO David Zinsner, the possibility of tariffs may have prompted some customers to buy Intel’s chips ahead of potential price increases.

Intel’s ongoing transition includes a focus on becoming a contract chip manufacturer for other companies, but this shift has raised concerns among investors about its cash flow. Last year, Intel abandoned its forecast of selling over $500 million worth of its new AI chips, Gaudi, which struggled to compete with Nvidia’s products.

For the upcoming quarter, Intel forecasted break-even adjusted per-share earnings, while analysts expected adjusted profits of 9 cents per share. The company has received federal grants under the CHIPS Act, which helped boost its revenue and profit margins for the fourth quarter.

In the personal computer market, which remains Intel’s largest revenue segment, global shipments grew only modestly last year, missing analysts’ expectations for a stronger rebound. Intel has also been losing market share in both the PC and server CPU sectors to competitor AMD (AMD.O), a trend expected to continue into 2025.

 

Mobileye Predicts Lower 2025 Revenue Amid China Market Challenges

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Mobileye has forecast lower-than-expected revenue for 2025, citing continued weakness in the Chinese market due to increasing competition from local self-driving technology providers. The company expects revenue between $1.69 billion and $1.81 billion, falling short of the $1.94 billion analyst consensus from LSEG data.

Chinese manufacturers have been developing their own advanced driver-assistance systems (ADAS) at lower costs, limiting Mobileye’s shipments to the region. In December, the company noted that its major automotive customers were losing market share in China as local automakers ramped up production of more affordable electric vehicles (EVs).

While shipment volumes of Mobileye’s EyeQ chips in China have improved compared to 2024, they remain sluggish, executives stated in a post-earnings call on Thursday. The recent reintroduction of Chinese government EV subsidies could stimulate demand, but the impact remains uncertain.

Despite these challenges, Mobileye reported fourth-quarter revenue of $490 million, surpassing the $477.8 million estimate but marking a 23% decline from the previous year. The drop was attributed to lower demand for its EyeQ chips as automakers continue to work through excess inventory.

Looking ahead, Mobileye remains optimistic about 2025, stating that its ongoing tests with potential customers for its assisted driving technology “will bear fruit” next year. The company also dismissed concerns that legacy automakers will fully develop their own in-house driver assistance systems, as many are reassessing their EV strategies amid slowing demand.

On an adjusted basis, Mobileye posted earnings of 13 cents per share in the fourth quarter, exceeding estimates of 11 cents. However, gross profit declined by 30% during the same period.