What to Expect When Snap Reports After the Close

Snap Inc. (NYSE: SNAP) is scheduled to release its first-quarter financial results after the markets close on Tuesday. Consensus estimates are calling for a net loss of $0.12 per share and $306.48 million in revenue. The same period of last year reportedly had $0.17 in EPS and $230.67 million in revenue.

Earlier this month, one research firm came out against the stock, issuing a “significant” downgrade. eMarketer believes that this stock is vastly overvalued and that the growth outlook for Snapchat’s U.S. social usage is questionable.

eMarketer also believes Snapchat will lose monthly users in the United States this year for the first time. Growth is expected to flatten out and plateau in 2020.

Ultimately, eMarketer expects to see Snapchat’s U.S. users hitting 77.5 million this year, a decrease of 2.8% year over year. Previously, the firm expected 90.4 million U.S. users in 2019, when it made its last prediction in the third quarter of 2018.

As a result, eMarketer has significantly downgraded its growth outlook for Snapchat in its latest U.S. social usage forecast.

Jasmine Enberg, eMarketer senior analyst, commented:

Increased competition from new and existing social platforms is partly to blame for Snapchat’s decline. But the product launches the company announced last week, including an in-app gaming platform, may improve user engagement and time spent, particularly among its core young user base. Gaming also provides a new revenue stream for Snapchat that could boost its ad business in the future.

Excluding Tuesday’s move, Twitter had outperformed the broad market, with the stock up about 109% year to date. However, in the past 52 weeks the stock was actually down 22%.

A few other analysts weighed in on Snap ahead of the results:

  • Credit Suisse has an Outperform rating and a $13 price target.
  • Vertical Group has a Negative rating.
  • Wedbush’s Neutral rating comes with a $12.25 price target.
  • Morgan Stanley has an Underweight rating and an $8.50 target.
  • RBC has an Outperform rating with a $17 price target.
  • Deutsche Bank has a Hold rating with a $13 price target.
  • Merrill Lynch has Neutral rating with a $12 price target.

Shares of Snap were last seen up more than 5% at $12.14 on Tuesday, in a 52-week range of $4.82 to $15.96. The consensus price target is $9.81.