By Angela Palumbo
Snap investors are looking for the Snapchat parent to show signs of advertising and user growth, which are crucial as competition and artificial-intelligence pressures remain.
Snap is scheduled to report fourth-quarter financials after the stock market closes on Wednesday. Analysts surveyed by FactSet expect the social-media company to report a loss of 3 cents a share on revenue of $1.7 billion. In the same period last year, Snap posted earnings of 1 cent a share on revenue of $1.56 billion.
Meta Platforms, the parent company of Facebook and Instagram, reported financial results on Jan. 29 that pointed to strong digital-advertising trends. This could bode well for Snap, which generates nearly all of its revenue from advertising.
Wall Street also expects the company to report daily active users of 477.5 million, which would be an increase of 5.4% from the same period one year ago and up slightly from the 477 million in the third quarter.
Snap earnings come at a momentous time for technology. On Wednesday, the sector was continuing Tuesday's selloff on intensifying concerns about how AI will disrupt software. Snap needs to prove that it has a strategy to make money from AI and compete with the larger tech players.
Snap stock has dropped 43% over the past 12 months. The platform needs to gain more users and grow advertising dollars to face down competition from the likes of social-media giants Meta, TikTok, and YouTube.
"In the end, Snap enjoys the benefit of trafficking in the digital ad market with strong secular trends; however, execution has been spotty, the competitive landscape is daunting, the gen AI movement favors the largest platforms, and the macro remains treacherous," Monness, Crespi, Hardt analyst Brian White wrote on Wednesday. He rates Snap Neutral, with no price target.
Snap is looking to expand in several areas that could get shareholders excited. The company announced on Jan. 28 that it was establishing a subsidiary within Snap, called Specs Inc., that will be responsible for creating augmented-reality eyewear to compete with smart glasses from companies like Meta and Alphabet. Investors will be looking for more updates on Specs tonight.
Snap also announced a partnership with Perplexity AI last year that will enable it to integrate that company's answer engine directly into Snapchat. Perplexity will pay Snap $400 million over one year, through a combination of cash and equity. The revenue from the partnership is expected to begin contributing in 2026, so investors will be keeping an eye on updates to that deal, too.
News Corp, the owner of Barron's publisher Dow Jones, has sued Perplexity AI for copyright infringement.
Mizuho analyst Lloyd Walmsley also rates Snap stock Neutral with no price target. He wrote on Tuesday that he expects that more competition and the pressure to get returns on hefty AI investments will continue to weigh on Snap in the months ahead.
He still believes these challenges are already priced into the stock, and feels optimistic that more AI advertising deals and "a 2026 recovery in the core ad business...could get shares moving."
Write to Angela Palumbo at angela.palumbo@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
February 04, 2026 15:00 ET (20:00 GMT)
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