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Snap (SNAP) earnings preview: focus on user and revenue growth

4:34 pm ET, 31 Jul 2018

Snap Inc. (SNAP) is expected to report earnings on August 7 after market close.  The report will be for the fiscal quarter ending June 2018. Shares are trading at 12.27, down -4.36%.

What are SNAP earnings expectations?  What news should investors be paying attention to?

Snap is the maker of one of the most popular social networking apps, Snapchat, which has captured 158 million users to date, most of whom are between the ages of 18 and 24. The company is starting to attract the attention of advertisers with a growth trajectory toward $1 billion in revenue. However, there is no guarantee that Snap will effectively monetize these users on a consistent basis.

Snap's competition, which includes Facebook with nearly 2 billion users, is overwhelming. In particular, Instagram, owned by Facebook, may emerge as a substitute for Snapchat. The larger ecosystems of Snap’s competitors may have also created somewhat of an exit barrier for their users, which could further limit the growth acceleration of Snapchat users. 

While digital ad budgets continue to grow, so does the number of ad inventory providers in the space.  There is no guarantee that a larger portion of new digital ad dollars will flow to Snap. Facebook and Alphabet’s Google, which have proven the value of their ad inventories to advertisers over the years and together dominate the market, will probably continue to take more digital ad dollars over time.

Snap Inc. has a mixed history of beating analysts’ earnings estimates. In the past four quarters, the company: 

  • Missed analyst EPS estimates by 2 cents ($-.16 actuals vs. $-.14 forecast) in FQ2’17;
  • Delivered on the analyst EPS estimate ($-.14 actuals vs. $-.14 forecast) in FQ3’17;
  • Beat analyst EPS estimates by 2 cents ($-.13 actuals vs. $-.15 forecast) in FQ4’17;
  • Delivered on the analyst EPS estimate ($-.17 actuals vs. $-.17 forecast) in FQ1’18.

For FQ2’18, EPS is expected to decline by 6% year-over-year to $-.17, while revenue is expected to grow 39% year-over-year to $253 million.  

Over the last month, Snap Inc. (SNAP) returned -6.26%.

Snap Inc. (SNAP) average analyst price target ($11.74) is -4.32% below its current price ($12.27).

For the latest price and information on Snap, please visit Finstead and search for "SNAP price" or "SNAP news".

Snap Inc: Here Is What You Need To Know Prior to Earnings Call Today

1:58 pm ET, 06 Feb 2018

Snap Inc. is reporting earnings today after market close. The report will be for the fourth quarter last year that ended in December 2017.  According to Finstead Research, SNAP price target upside is -7.36% (visit Finbot and type "SNAP upside"). 

Here is what you need to know about Snap Inc. 

Snapchat is enhancing its services by developing engagement features such as Geofilters and context cards to find information about geotagged places, and incorporating 3D Bitmoji World Lenses in collaboration with Jeff Koons, a prominent artist.   It is also removing its dependency on search engines. 

According to a market research firm eMarketer, Snapchat has a higher number of teen users compared to Facebook and Instagram.  Also, the introduction of the location-based map feature has caused a 40% surge in the submission of stories.

Its investment in advertisement measurement solutions, collaboration with NBC News and Time Warner and incorporation of ESPN’s SportsCenter to the platform will play a significant role in attracting new subscribers.

But there are a number of items that worry investors about Snap Inc. 

Facebook and Instagram have been very successful at mimicking Snapchat's features. 

The absence of revenue diversification is apparent and becomes even more pronounced with a 60% year-over-year reduction in ad unit costs (i.e., cost per thousand impressions).

Snap spent roughly $40 million on the hardware product called Spectacles, which went nowhere. 

Also, Snap is not making significant efforts to attract an older generation.  It is competing head-to-head with Amazon Prime, Netflix, Hulu and Time Warner’s HBO in the video streaming market; however, its competitive advantages are unclear to investors.  

2017 IPOs: Dragged Down by Snap and Blue Apron?

1:03 am ET, 20 Dec 2017

Renaissance Capital released a report on the state of 2017 Initial Public Offerings (IPOs).  The 2017 IPO market was significantly more prolific than the one in 2016, but definitely not as good as the one in 2014. 

There are two IPOs that unfortunately took the market in a negative direction: Blue Apron (NYSE: APRNand Snap (NYSE: SNAP). 

Here are some interesting stats from Renaissance Capital about 2017 IPOs:

  • There were 160 public offerings in 2017, raising a total of $35.6B vs. 105 IPOs with $18.8B raised in 2016 and 275 IPOs with $85.3B raised in 2014
  • For tech, there were 37 IPOs in 2017 that raised $9.9B vs. 21 IPOs in 2016 that raised $2.9B and a total of 56 IPOs in 2014 that raised $32.9B.

The average IPO returned 21% in 2017 (vs. Dow Jones up 17%, Nasdaq up 12% and S&P 500 up 11%).

35 of those 160 IPOs in 2017 came from overseas, led by 15 from China. To the degree that companies are getting to the public markets, more of the benefits are flowing outside the U.S.

Below is the view of the APRN stock move; in the last 3 months, the stock lost 24% in value.  

Blue Apron APRN

The SNAP stock didn't do much better either.  Since its IPO, SNAP lost more than 34% in value.  

SNAP stock

Snap Inc. (SNAP) Stock Guide

Updated at: 9:35 pm ET, 18 Sep 2020

Before we start: if you're looking for SNAP stock price, you can quickly find it out by visiting Finny and typing "SNAP quote". If you're looking for a quick scoop on SNAP stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "SNAP". You'll get all this info in one place. Or you can just type "SNAP news" to get the latest stock news.

Looking to buy or sell Snap Inc. (SNAP)? Interested in getting the full scoop on SNAP, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this SNAP stock guide, we'll address key questions about SNAP, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analyst Predictions: stock forecast and analyst ratings;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are SNAP earnings?
2. What is SNAP stock forecast (i.e., prediction)?
3. SNAP buy or sell? What is SNAP Finny Score?
4. What are the reasons to buy SNAP? Why should I buy SNAP stock?
5. What are the reasons to sell SNAP? Why should I sell SNAP stock?
6. What are SNAP key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are SNAP earnings?

SNAP trailing 12-month earnings per share (EPS) is -$0.78.

Analyst Predictions

2. What is SNAP stock forecast (i.e., prediction)?

Based on SNAP analyst price targets, SNAP stock forecast is $25.96 (for a year from now). That means the average analyst price target for SNAP stock is $25.96. The prediction is based on 36 analyst estimates.

The low price target for SNAP is $17.00, while the high price target is $31.00.

SNAP analyst rating is Hold.


3. SNAP buy or sell? What is SNAP Finny Score?

#{finnyScore:25}Our quantitative analysis shows 2 reasons to buy and 6 reasons to sell SNAP, resulting in Finny Score of 25.

4. What are the reasons to buy SNAP? Why should I buy SNAP stock?

Here are the reasons to buy SNAP stock:

  • Snapchat has added a number of features such as 3-D Friendmoji Deluxe World Lens, Bitmoji Deluxe, Context Cards, Stories in Search, 3D World Lens, Custom Stories, Snap Maps and Geofilters to make its platform more attractive to users as well as advertisers. The company recently collaborated with artist Jeff Koons to unveil an art platform and rolled out 3D Bitmoji World Lenses. With the addition of the Context Cards feature, users are able to view information related to the places that are geotagged to the images or videos uploaded on the application.
  • Snapchat is the most preferred social networking medium among teens, per Piper Jaffray’s 34th semi-annual Taking Stock with Teens survey. Reportedly, 47% of the respondents (with average age of 16 years) said that they prefer using Snapchat compared with 12% respondents in the fall 2016 survey. Per an October report by Axios, Snap witnessed a 40% increase in increase in submission of Stories since it unveiled its location based Map feature in June 2017. This bodes well for the company as user engagement holds the key to attracting advertisers, which is the primary source of revenues for Snap.
  • Advertising is the primary source of revenues for Snap. Snap’s transition to automated or programmatic auction of Snap Ads is driving its advertising revenues. The company’s advertising products include Snap Ads and Sponsored Creative Tools like Sponsored Lenses and Sponsored Geofilters.
  • Snap is aggressively ramping up its original content efforts. The company partnered with NBC News to produce a twice-daily headline news show Stay Tuned for the Snapchat app in a bid to reach the highly sought-after millennial cohort. Moreover, the company also inked a $100 million content deal with media giant, Time Warner Inc.
  • SNAP quarterly revenue growth was 17.00%, higher than the industry and sector average revenue growth (1.28% and 0.89%, respectively). See SNAP revenue growth chart.
  • SNAP cash to debt ratio is 1.45, higher than the average industry (0.17) and sector (0.17) cash to debt ratio. See SNAP cash to debt chart.

5. What are the reasons to sell SNAP? Why should I sell SNAP stock?

Let's look at the reasons to sell SNAP stock (i.e., the bear case):

  • Competition from Facebook poses a serious threat to the company. Facebook’s strategy of mimicking Snapchat features on its platforms to boost user growth and engagement levels has paid off. The company even succeeded in making them more popular than Snapchat.
  • Lack of revenue diversification is another major concern for Snap. The company currently has only one major source of revenues i.e advertising. Continuous decline in price per ad impression has raised concern among investors.
  • Lackluster user growth remains the primary concern for investors. The company’s problem has been its sole focus on the younger demographic. The company undoubtedly is quite popular among that demography but the failure to attract the older generation (above 34 year olds) has been a major headwind.
  • In the video streaming market, the company faces stiff competition from established players like Amazon Prime, Netflix, Hulu and Time Warner’s HBO. Given the high growth opportunity in the video streaming market, the players are ramping up their efforts to boost subscriber base. The companies are undertaking a number of initiatives such as investing more in regional programming and making more kids and family oriented content in a bid to gain an edge.
  • SNAP forward P/E ratio is 224.10, which is high compared to its industry peers’ P/E ratios. See SNAP forward P/E ratio chart.
  • SNAP Price/Book ratio is 14.95, which is high compared to its industry peers’ P/B ratios. See SNAP forward Price/Book ratio chart.
  • SNAP Price/Sales ratio is 17.12, which is high compared to its industry peers’ P/S ratios. See SNAP forward Price/Sales ratio chart.
  • SNAP short share of float is 7.02%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock. See SNAP short share of float chart.
  • SNAP short interest (days to cover the shorts) ratio is 2.63. The stock garners more short interest than the average industry, sector or S&P 500 stock. See SNAP short interest ratio chart.
  • SNAP Enterprise Value/Revenue multiple is 16.79, which is high compared to its industry peers’ Enterprise Value/Revenue multiples. See SNAP Enterprise Value/Revenue chart.

Key Stats

6. What are SNAP key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for SNAP:

Metrics SNAP
Price $39.08
Average Price Target / Upside $26.46 / -32.28%
Average Analyst Rating Hold
Forward Dividend Yield 0.00%
Industry Internet Content & Information
Sector Technology
Number of Employees 2,884
Market Cap $40.14B
Forward P/E Ratio 273.20
Price/Book Ratio 20.87
Revenue (TTM) $1.92B
YoY Quarterly Revenue Growth 17.00%
Profit Margin -57.18%

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