Can Snap Keep Its 2019 Rally Going With Q4 Earnings?

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Snap Inc. (NYSE: SNAP) is set to report its most recent quarterly results after the markets close on Tuesday. The consensus estimates call for a net loss of $0.08 per share and $375.82 million in revenue. The fourth quarter of last year reportedly had a net loss of $0.13 per share and $285.69 million in revenue.

Snap posted a 43% increase in revenue in the third quarter to $297 million. But all the other financial data from the company was ugly. Based on most metrics, Snap continues to die and management has no way to stop that. The anxiety around its fortunes had driven its share price near all-time lows.

Snap’s third-quarter net loss of $325 million compared to a loss of $443 million in the year-ago quarter. It could perversely be called an improvement. Just as bad, daily active users were up only 1% from the previous quarter to 186 million. By this most important metric to measure social media companies, Snap is a failure.

Additionally, Snap management announced low expectations for the fourth quarter:

Revenue is expected to reach a new high of between $355 million and $380 million, or grow between 24% and 33% compared to Q4 2017. Adjusted EBITDA is expected to be between $(100) million and $(75) million, compared to $(159) million in Q4 2017.

Yet, Snap has outperformed the broad markets, with the stock up about 26% year to date. In the past 52 weeks, the stock is down 50%.

A few analysts weighed in on Snap ahead of the report:

  • Credit Suisse has an Outperform rating with a $9.50 price target.
  • Morgan Stanley has an Underweight rating and a $5 price target.
  • Aegis has a Hold rating with a $7 price target.
  • Pivotal Research has a Hold rating and a $6 target.
  • RBC has a Sector Perform rating.
  • Citigroup has a Neutral rating with a $7 price target.
  • Cowen has a Market Perform rating and a $6 price target.
  • Goldman Sachs has a Neutral rating with a $6 price target.

Shares of Snap were last seen at $6.94, in a 52-week range of $4.82 to $21.22. The consensus analyst price target is $7.63.

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