What Happened?

Shares of social network Snapchat (NYSE: SNAP) jumped 5.5% in the afternoon session as stocks rebounded to start the session amid continued market volatility and moved slightly higher after the Federal Open Market Committee kept rates at 4.25% to 4.50% in its March 2025 meeting. The Jerome Powell-led committee also hinted at two more rate cuts for the year, saying, "Uncertainty around the economy has grown." 

The good news is that holding rates steady and signaling two additional cuts this year means no surprises (the market dislikes surprises). The bad news is that the Fed reduced its outlook growth to 1.7%, down from the previous projection of 2.1% in December. At the same time, the inflation outlook was raised to a 2.8% annual increase for core prices, up from the prior projection of 2.5%. This suggests the Fed sees the macro tilting towards a stagflation scenario, where inflation rises as economic growth slows.

The shares closed the day at $9.04, up 3.5% from previous close.

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What The Market Is Telling Us

Snap’s shares are very volatile and have had 23 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 11 months ago when the stock gained 27.5% on the news that the company reported strong first-quarter results with revenue beating expectations, driven by better-than-expected daily active users. Its revenue growth and higher operational efficiency also enabled it to post positive EBITDA and free cash flow, beating Wall Street's pessimistic estimates. 

The company noted strong momentum in its Snap Star program, which seeks to bring social media influencers into its platform to drive engagement. This helped contribute to a tripling of Snapchat+ subscribers and 125% year-on-year growth in total time spent watching Snapchat Spotlight content. The number of small- and medium-sized businesses advertising on Snapchat also grew 85% year on year. 

Lastly, next quarter's revenue, EBITDA, and daily active users guidance surpassed estimates. It expected to have 431 million daily active users. Overall, this was a strong quarter that should satisfy shareholders.

Snap is down 19.1% since the beginning of the year, and at $9.09 per share, it is trading 47% below its 52-week high of $17.14 from May 2024. Investors who bought $1,000 worth of Snap’s shares 5 years ago would now be looking at an investment worth $959.87.

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