Evan Spiegel, CEO of Snap Inc., speaks onstage during the Snap Partner Summit 2023 at Barker Hangar on April 19, 2023 in Santa Monica, California.
Joe Scarnici | Getty Images Entertainment | Getty Images
Snap shares tanked 30% in Wednesday morning trading, a day after missing revenue estimates and issuing light guidance in its fiscal fourth-quarter earnings report. The company is struggling with a slower rebound from a tough 2022 advertising market than other firms like Meta.
Snap is headed for one of its worst days on the market since its debut seven years ago. Its two biggest one-day declines were a 43% drop in May 2022 and a 39% plunge two months later.
Snap reported revenue of $1.36 billion for the quarter, slightly below the $1.38 billion expected by analysts, according to LSEG, formerly known as Refinitiv. The company reported adjusted EPS of 8 cents versus the 6 cents analysts expected.
The results mark the company’s sixth straight quarter of single-digit growth or sales declines. Snap forecasted that its growth would gain momentum in the first quarter, but not as swiftly as analysts expected.
Analysts at Morgan Stanley maintained their underweight rating of Snap and lowered their price target to $11 in a note to investors Wednesday, writing that the company’s ad turnaround was slower than expected and its engagement weak. They noted that strong ad improvements and impression growth at Meta and Amazon could represent another headwind for Snap’s ad revenue.
“While we are encouraged by the progress we are making with our ad platform and the improved results we are delivering for many of our advertising partners, we estimate that the onset of the conflict in the Middle East was a headwind to year-over-year growth of approximately 2 percentage points in Q4,” Snap said in a letter to investors.
Barclays analysts remained optimistic after the earnings, keeping an overweight rating and $15 price target on the stock and writing that “buying the dip seems worrying but is likely the right thing to do here.”
“Stepping back, 4Q was a mixed bag, but the acceleration in 1Q gives us confidence that things are getting back on track,” the analysts wrote. “SNAP feels like META around 5 quarters ago, at the cusp of some pretty nice recovery trends but with few believers in the thesis.”
JPMorgan analysts reiterated their underweight rating of Snap shares while raising their price target from $9 to $11 based on 2025 revenue expectations of around $5.9 billion, and wrote that “stronger growth in engagement and the ad platform” is needed in light of the “choppy recovery” reflected in the company’s fourth-quarter earnings and first-quarter outlook.
“In the meantime, the extreme volatility in Snap shares will keep many at a distance, & the company will need to continue to show that it can drive improved execution,” they wrote.
— CNBC’s Michael Bloom and Jonathan Vanian contributed to this report.
OpenAI says in memo that Musk’s claims ‘stem from Elon’s regrets’ that he’s not part of company
Sam Altman, CEO of OpenAI, at the Hope Global Forums annual meeting in Atlanta on Dec. 11, 2023.
Dustin Chambers | Bloomberg | Getty Images
“We believe the claims in this suit may stem from Elon’s regrets about not being involved with the company today,” wrote OpenAI Chief Strategy Officer Jason Kwon in an internal memo on Friday that was viewed by CNBC. “It is deeply disappointing to see Elon take this action against a company he helped start, especially given his close collaboration with some of you who are still here working towards the mission.”
Musk co-founded OpenAI in 2015 and stepped down from its board in 2018, four years after saying that AI is “potentially more dangerous than nukes.”
Musk is now suing Microsoft–backed OpenAI and CEO Sam Altman, among others, alleging they abandoned the company’s founding mission to develop artificial intelligence “for the benefit of humanity broadly.”
Since releasing the ChatGPT chatbot to the public in late 2022, OpenAI has become one of the hottest startups on the planet, with a valuation reportedly over $80 billion. The company’s convoluted “capped-profit” structure resulted in Altman being briefly ousted by the board late last year, before an uproar among investors and employees led to his quick reinstatement.
Musk has long wanted recognition for his central role in the creation of OpenAI, and he spent large chunks of the lawsuit telling his version of events. His lawyers said in the suit that Musk was approached in 2015 by Altman and OpenAI co-founder Greg Brockman and agreed to form a nonprofit lab that would develop artificial general intelligence, or AGI, outside of the corporate sphere.
Musk’s attorneys said their client contributed over $15 million to OpenAI in 2016, which was “more than any other donor” and helped the startup build a team of “top talent.” The next year, Musk gave nearly $20 million to OpenAI, which the attorneys reiterated was more than other backers. In total, Musk invested over $44 million into OpenAI from 2016 through September 2020, according to the suit.
Additionally, Musk leased OpenAI’s initial office space “and paid the monthly rental expenses,” the suit said. He was also “present for important company milestones.”
Kwon didn’t dispute Musk’s central role in the early days of OpenAI, but he added some other details. For example, Kwon wrote that Musk at one point indicated he needed “full initial control and majority equity” and later suggested that OpenAI merge with Tesla.
“We did not think either approach was right for the mission,” Kwon wrote.
In the memo, Altman called Musk a hero of his and said the he misses the old version of his co-founder. But he said the company’s mission continues.
While it’s the first time the dispute between the two sides has resulted in a fiery lawsuit, they’ve been at odds for a while.
Before he split with OpenAI, Tesla hired co-founder Andrej Karpathy as senior director of AI. Karpathy returned to OpenAI in 2023. And Musk has been notably vocal in his opposition to OpenAI and its Microsoft partnership in recent years, stating publicly in November that OpenAI had deviated from its original mission.
“OpenAI should be renamed ‘super closed source for maximum profit AI,’ because this is what it actually is,” Musk said onstage at The New York Times’ DealBook conference. Regarding OpenAI’s transformation from an “open source foundation” to a multibillion-dollar for-profit company, Musk said, “I don’t know, is this legal?”
Kwon insisted on Friday that OpenAI is independent and continues to work “to ensure AGI benefits all of humanity.”
Musk’s lawyers didn’t immediately respond to a request for comment.
— CNBC’s Lora Kolodny and Hayden Field contributed to this report
Waymo approved by regulator to expand robotaxi service in Los Angeles, San Francisco Peninsula
Passengers ride in an electric Waymo full self-driving technology in Santa Monica
Allen J. Schaben | Los Angeles Times | Getty Images
Alphabet’s Waymo robotaxi unit won approval from the California Public Utilities Commission to expand service to parts of Los Angeles and the Bay Area, according to a notice posted to the regulator’s website on Friday.
“Waymo may begin fared driverless passenger service operations in the specified areas of Los Angeles and the San Francisco Peninsula, effective today,” the release said.
In mid-February, Waymo initiated a voluntary recall filing notice with the National Highway Traffic Safety Administration, saying it would fix software issues. The recall followed two previously undisclosed incidents that occurred in Phoenix on Dec. 11, in which unmanned Waymo vehicles crashed into the same towed pickup truck within minutes of each other.
The collisions added to existing concerns about autonomous vehicle use in California. Competing taxi and transit service providers and labor activists are worried about the loss of drivers’ jobs, while safety advocates wrote letters to regulators and politicians asking them to thwart Waymo’s expansion in the state.
The CPUC in February had suspended Waymo’s expansion efforts for up to 120 days to provide for added review time.
In its letter on Friday, the regulator said it was approving the new proposal, due in part to “Waymo’s updated Passenger Safety Plan (PSP), submitted in connection with its expanded operational design domain (ODD) for deployment,” which was also approved by the California Department of Motor Vehicles.
“We’re grateful to the CPUC for this vote of confidence in our operations, which paves the way for the deployment of our commercial Waymo One service in Los Angeles and the San Francisco Peninsula,” a Waymo spokesperson said in a statement.
Waymo’s progress in California comes after General Motors-owned Cruise and Apple bowed out of the autonomous vehicle business in California, while Elon Musk’s Tesla has yet to develop an autonomous vehicle that can safely operate without a human driver at the controls.
California regulators halted operations of self-driving Cruise robotaxis in October after a series of incidents, including one that resulted in a robotaxi rolling over a pedestrian who had first been hit by a human-driven car and was then pulled forward about 20 feet by the Cruise vehicle.
Waymo’s new approvals allow the company’s robotaxis to operate close to Tesla’s Palo Alto engineering headquarters in San Mateo County.
The latest notice applies to the commercial ride-sharing service Waymo One. The company has deployed testing vehicles in those areas for several years.
Super Micro joining S&P 500 after stock price soars more than 20-fold in two years
David Paul Morris | Bloomberg | Getty Images
Super Micro Computer is joining the S&P 500 following a historic rally in the stock that has pushed the company’s market cap past $50 billion.
The shares, up more than 20-fold in the past two years and over 200% just since the start of 2024, climbed another 8% in extended trading on Friday.
Stocks added to the benchmark index often rise in value because funds that track the S&P 500 will add it to their portfolios. The median market cap for companies in the S&P 500 is $33.7 billion.
Super Micro has been one of the main beneficiaries of the artificial intelligence boom sweeping the technology industry. The company makes servers and other computer infrastructure, and it’s one of the primary vendors for building out Nvidia-based “clusters” of servers for training and deploying AI models.
In the quarter that ended December, Super Micro’s revenue more than doubled to $3.66 billion. Analysts expect sales in the current quarter to more than triple.
“We see Nvidia’s results as a positive data point for SMCI which is one of the leading partners that designs and manufactures servers to wrap around the GPUs and customizes racks to the specific needs of a customer,” Bank of America analyst Ruplu Bhattacharya wrote in a note last month. He has a buy rating on the stock.
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