Snap Beat Every Q1 Number That Mattered — So Why Are Investors Running for the Exit?

Shares of Snap Inc. plunged 8.8% in pre-market trading to $5.57 on May 7, deepening a post-earnings selloff that began the prior evening. The quarterly scorecard looked solid on paper: revenue rose 12% to $1.53 billion, adjusted EBITDA more than doubled to $233 million, and free cash flow nearly tripled to $286 million.

Daily active users hit 483 million, beating the 475.6 million estimate. Yet the market punished the stock — a clear signal that investors are pricing in what's ahead, not what just happened.

A $400 Million AI Deal Vanished Overnight. Snap confirmed it "amicably ended" its partnership with AI search startup Perplexity in Q1 — a $400 million deal that had sent shares up 15% when announced last November.

Rosenblatt had been counting on that revenue windfall, and its collapse nearly cancels out the $500 million in annualized savings from layoffs — meaning the net financial improvement investors expected just got cut roughly in half.

Workforce Cuts Sound Tough but the Math Is Fragile. Snap is slashing roughly 1,000 jobs — 16% of its workforce — closing 300+ open roles, and targeting $500 million+ in annual savings by late 2026, with operating expense guidance cut from $3 billion to $2.75 billion.

But restructuring costs of $95–$130 million, mostly hitting Q2, create an immediate earnings drag. Investors worry: can a leaner team sustain 12% revenue growth, or does execution risk rise as institutional knowledge walks out the door?

The Competitive Gap Keeps Widening. Big tech peers reported Q1 results that exposed the scale divide: Meta's ad revenue surged 33% to over $56 billion, and Alphabet beat estimates across every division.

Meanwhile, the Iran conflict is costing Snap $20–$25 million monthly in lost ad spending — a hit that could exceed $200 million annualized , magnified by Snap's thinner margins.

The Street Says "Hold" — and That's the Problem. 24 analysts carry a consensus Hold rating with an average price target of $8.15 — roughly 46% above today's pre-market price. That gap suggests either deep-value potential or a target that hasn't yet absorbed the Perplexity collapse and geopolitical headwinds. Outgoing CFO Derek Andersen departs May 8 for Expedia , adding leadership uncertainty at the worst possible moment. For shareholders, the turnaround story now rests on one question: can cost cuts alone replace vanished revenue and a departing finance chief?