What to Expect From Snap Earnings

Print Email

Snap Inc. (NYSE: SNAP) is scheduled to release its first-quarter financial results after the markets close on Tuesday. The consensus estimates call for a net loss of $0.16 per share and $252.95 million in revenue.

This company took a lot of criticism when it announced its app redesign back in November. Essentially, it plans to split the social and the media aspects of the app. CEO Evan Spiegel described the change as follows:

On the redesigned app, users will swipe to the left of the main camera screen to see chats, stories and messages from their friends, and swipe to the right for news, Snap Map and publisher content. The new Discover page reorganizes news from a horizontal scroll to a vertical, in the vein of Facebook’s and Twitter’s seemingly endless feeds.

Although this might be a noble effort to separate “Fake News” and internet trolls from just a purely social platform, there are plenty of arguments against this move. Questions include whether this will affect the bottom line or drive away advertisers.

At Jefferies, analyst Brent Thill had a chance to review the redesign. Thill ultimately doesn’t believe that this separation will be good for Snap. Jefferies downgraded Snap to a Hold rating from Buy with a $15 price target.

Jefferies isn’t the only firm passing on Snap. Cowen released a report earlier this month in which it found that ad buyers ranked Snap lowest among social media companies. A majority of these ad buyers (96%) said that they would prefer to advertise on Instagram, the leading competitor to Snap.

Prior to the release of its earnings report a few other analysts had this to say:

  • Stifel has a Hold rating with a $13 price target.
  • Deutsche Bank has a Hold rating with a $13 target.
  • Raymond James has an Underperform rating.
  • Pivotal Research has a Sell rating and a $10 target price.
  • Credit Suisse has a Buy rating with an $18 price target.
  • Drexel Hamilton has a Buy rating and a $28 target.

Shares of Snap traded up about 1% at $13.98 on Tuesday, with a consensus analyst price target of $12.36 and a 52-week range of $11.28 to $29.44.