• Snap (SNAP) earnings disappointed analysts.
• It now calls itself an “augmented reality company,” eschewing the social media label.
• Snap is husbanding cash as it waits out the social media firestorm. Investors should do the same.

Snap (NASDAQ:SNAP) missed earnings estimates but the stock has been surprisingly resilient.

Shares went on a roller coaster ride, falling before earnings, and rallying twice after. Shares were due to open April 25 at $29.25, down about 5%.

The company said it lost $359 million, 22 cents per share, during the March quarter, on revenue of $1.06 billion. The loss was worse than the previous year’s $287 million, or 19 cents, but revenue was up 39% year-over-year.

Snap’s press release highlighted $127 million in positive operating cash flow. It sold nearly $1.5 billion in convertible notes, leaving it with $2.4 billion in cash and equivalents at the end of March. Snap also holds $2.6 billion in marketable securities.

Social Media’s Struggles and Decline

My earnings preview emphasized differences with Meta Platforms (NASDAQ:FB), which have taken the whole social media complex down. Rather than rewrite its software platform, Snap is augmenting it with “Spectacles,” clear glasses that provide augmented reality features. Think Pokemon Go.

Negative views on social media stocks may be why the board of Twitter (NASDAQ:TWTR) now seems happy to let Tesla (NASDAQ:TSLA) CEO Elon Musk take the company off their hands. Services that once seemed fun now appear exhausting. Families of teens who died by suicide after using apps are suing.

Snapchat has responded with new policies aimed at halting anonymous messaging through third party apps. Snap says the new policies impact few developers, but some are popular apps like Sendit, which got 3.5 million downloads after other anonymous apps were suspended.

The Financial Lens

What Wall Street wants to see is money.

Snap is now testing ads in Spotlight, its version of TikTok. Some creators have even added “mid-roll” ads, advertisements placed in the middle of a story rather than at the beginning or end.

Other efforts at monetization are resisted on privacy grounds. Snap CEO Evan Spiegel now calls Snap “an augmented reality platform,” resisting the social media tag entirely.

Spiegel told his earnings call 2.5 million AR “Lenses” have been created, 3D layovers that can be painted over scenes, pointing users to commerce. Supporting this AR push, the company has created an AR Certification Program, an online studio and a creator marketplace.

Analysts who are bullish on Snap say that these Lenses differentiates it from other platforms. They compare it to QR codes, which first saw resistance but have become widely accepted since the pandemic began.

An example of what’s possible is a virtual mural Walt Disney (NYSE:DIS) and Snap are creating at California’s Disneyland. The mural lets visitors add their own photos, or use Disney’s own, to customize their view and memories. The customized mural can then be bought for $16.95.

Focusing on advertisers and respected business partners sounds nice, but critics say it makes Snap as spontaneous as an ad for corn flakes.

The Bottom Line on SNAP Stock

Analysts haven’t given up on Snap. Tipranks still calls it a strong buy, with 23 of 29 who follow the stock pounding the table for it.

But we can live without social media. I’m seeing less traffic on all the platforms I use. There’s a growing backlash against the whole online world. This will benefit offline experiences and, less online, walled gardens like gaming.

While Snap is talking the language of growth, its moves to raise cash tell me it’s conscious of the backlash.

People have been using social media platforms for well over a decade now. And we’ve increasingly seen its dark side. Snap seems more proactive in fighting this than rivals. But turning social media into a shopping mall won’t work either.

If you have a profit in SNAP stock, take it. If you’re looking to buy the dip, don’t.

On the date of publication, Dana Blankenhorn held no positions in companies mentioned in this story. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.