Be Wary Of Buying Snap Stock Ahead Of Its Earnings

Snap (NYSE:SNAP) is scheduled to report its earnings on Tuesday, August 5, 2025. Over the past five years, Snap stock has frequently reacted negatively to earnings announcements. In 61% of instances, the stock has seen a negative one-day return post-results. The median one-day decline has been a significant -17.0%, with a maximum one-day drop of -39.1%.

For event-driven traders, understanding these historical patterns can be advantageous, though the actual results relative to consensus and expectations will be paramount. There are two main strategies to consider:

• Pre-Earnings Positioning: Analyze the historical odds and take a position before the earnings release.
• Post-Earnings Positioning: Examine the correlation between immediate and medium-term returns after the earnings are released to guide your positioning.

Analysts anticipate Snap to report earnings of $0.02 per share on sales of $1.35 billion. This compares to earnings of $0.02 per share on sales of $1.24 billion in the same quarter last year.

Currently, Snap has a market capitalization of $16 billion. Over the last twelve months, the company generated $5.5 billion in revenue. However, it was operationally loss-making, reporting $-648 million in operating losses and a net loss of $-532 million.

That said, if you seek upside with lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative — having outperformed the S&P 500 and generated returns exceeding 91% since its inception.

See earnings reaction history of all stocks

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Snap’s Historical Odds Of Positive Post-Earnings Return

Some observations on one-day (1D) post-earnings returns:

• There are 18 earnings data points recorded over the last five years, with 7 positive and 11 negative one-day (1D) returns observed. In summary, positive 1D returns were seen about 39% of the time.
• However, this percentage decreases to 10% if we consider data for the last 3 years instead of 5.
• Median of the 7 positive returns = 24%, and median of the 11 negative returns = -17%

Additional data for observed 5-Day (5D) and 21-Day (21D) returns post earnings are summarized along with the statistics in the table below.

SNAP 1D, 5D, and 21D Post Earnings Return

Correlation Between 1D, 5D and 21D Historical Returns

A relatively less risky strategy (though not useful if the correlation is low) is to understand the correlation between short-term and medium-term returns post earnings, find a pair that has the highest correlation, and execute the appropriate trade. For example, if 1D and 5D show the highest correlation, a trader can position themselves “long” for the next 5 days if the 1D post-earnings return is positive. Here is some correlation data based on a 5-year and a 3-year (more recent) history. Note that the correlation 1D_5D refers to the correlation between 1D post-earnings returns and subsequent 5D returns.

SNAP Correlation Between 1D, 5D and 21D Historical Returns

Is There Any Correlation With Peer Earnings?

Sometimes, peer performance can have an influence on post-earnings stock reaction. In fact, the pricing-in might begin before the earnings are announced. Here is some historical data on the past post-earnings performance of Snap stock compared with the stock performance of peers that reported earnings just before Snap. For fair comparison, peer stock returns also represent post-earnings one-day (1D) returns.

SNAP Correlation With Peer Earnings

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