Snap Inc

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Feb 022023

Snap fails to snaps out of it

Snap’s Q4 report had investors thinking it might be time to jump ship.

  • Creator of Snapchat, Snap, reported disappointing Q4 earnings results for the third quarter in a row. The company reported earnings per share of $0.14 against estimates of $0.11, however it missed on revenue estimates of $1.31bn – reporting $1.30bn.
  • The really bad news however was its global daily active users, which missed on estimates of 375.5m at 375m. Its average revenue per user also came in short at $3.47 per user against predictions of $3.49.
  • The news was enough to cause its share price to tumble more than 10% yesterday, after already having fallen by 28% after its previous quarterly report. It’s been described by the company as a “challenging year marked by macroeconomic headwinds”. Ain’t that the truth, Snap.

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Oct 212022

How to lose $4bn

That viral crying Snap filter is feeling all too real as investors watch shares in the social media stock plummet following yet another depressing earnings report.

  • Snap stock crashed roughly 25% in extended trading on Thursday, wiping $4bn off its market cap and hitting its lowest level since 2019. It came after the embattled company reported earnings, and while EPS of $0.08 beat estimates for a $0.02 loss and daily active users rose 19% to top estimates at 363m, revenues of $1.13bn were shy of expectations.
  • Widening losses and digital ad distress were what pricked the bear's ears. On top of slowing revenue growth, net losses ballooned 400% to $360m, which included its restructure and its mass layoffs. In a letter to shareholders, Snap confirmed advertisers are continuing to significantly pull back on spending thanks to both Apple’s privacy changes and inflation.
  • For a second quarter, Snap didn’t offer guidance but did say that revenue growth will continue to slow. The dire earnings follow a similarly bearish Q2 and mean Snap is now down over 83% YTD, while also sending a shudder down the spine of investors in other ad-dependent platforms like Google and Meta, which dropped 3% and 5% respectively. Hold onto your hats folks, this earnings season could be rough.
Thought Catalog / Unsplash
Jul 222022

Snap go the media stocks

Snap is on a streak of earnings misses and its bumming out other social media investors, who are fearing the declining ad demand will spread to their portfolio too.

  • Snap shares plunged over 25% in extended trading on Thursday to end a five-day winning streak, and have yet to recover from the previous quarter’s earnings disappointment. The app maker missed on both ends again in Q2, reporting LPS of $0.02 on revenues that were up 13% (short of the 20%-25% previously forecast) at $1.11bn.
  • They woulda got away with it too, if it weren’t for those meddling Apple rules. The word “headwinds” appeared a lot, largely in reference to Apple’s recent privacy changes, which have “upended more than a decade of advertising industry standards”. Other ad-dependent platforms declined in fear of a similar fate, including Meta, Twitter, Alphabet and Pinterest.
  • The good news is that daily active users (DAUs) are growing, hitting 347m vs the 344.2m expected, and that the company has nearly $5bn in cash and equivalents on the books. However, Snap refused to give guidance for the quarter bc of the “challenging environment”, and will be substantially slowing their rate of hiring. More social media earnings next week, so stay tuned.
See all reported financials
Alexander Shatov / Unsplash
May 242022

The death note

Selfies are old news, at least according to a note drawn up by Snap CEO Evan Spiegel to his employees on Monday.

  • SNAP plummeted 30% in extended trading yesterday after CEO Evan Spiegel silently walked around Snap HQ’s office handing out sad haiku to his employees that read: We are in trouble / Don’t go to the media / Bears take selfies too (he didn’t actually do this).
  • Needless to say, the media did catch wind of the ominous forecast. Spiegel’s internal company email let slip that Snap will miss its yearly targets for EPS and revenues, while hiring plans will be slowed to tighten the purse strings. Snap may’ve missed on both ends in Q1, but it wasn’t a nightmare report card given its active user base increased by 18% YoY.
  • The rumors spread across the tech sector like malware, spooking both the share price of Meta which dropped 7%, and Pinterest which fell 12% in after-hours trading. Snap itself is now down around 70% from its ATH of $85 in September last year.
Mae Mu / Unsplash
May 032022

Look Ma, no hands

Snap releases a cute ‘lil flying drone called Pixy, letting users have an immersive 360-degree vanity experience.

  • Thirst traps are about to get a shake-up with the launch of Pixy, the yellow selfie drone. The social media company has dubbed the “free-flying sidekick” an alternative to the classic self-stick. OK, whatever you say. So long as it doesn’t stray onto an airport runway and delay our flights by six hours.
  • Pixy flies around and takes vids and photos with a 12MP camera, and peeps’ fave shots are then wirelessly transferred onto the Snapchat app. The drone is pretty accessible too at only 101 grams, but will cost users $230.
  • This venture is another push into the augmented reality and hardware world for Snap. It released camera glasses called ‘Spectacles’ in 2016… which lost around $40m for the company. But with the growing adoption of VR and metaverse products, could this time prove more successful for the social media big dogs?

Meet Pixy. Your friendly flying camera. Pixy brings magic to every moment, all you have to do is let it fly! #FlyWithMe

Apr 222022

No claps for Snap

Snap kicks off social media earnings szn on a cautionary note, leaving investors looking for a filter to cover up a downbeat outlook.

  • Shares snapped up 6% in extended trading on Thursday, despite missing on both ends in a “challenging quarter”, reporting a LPS of $0.02 (vs the expected $0.01 in EPS) on revenues that grew 38% to hit $1.06bn. Snap’s daily active users (DAU) jumped 18% YoY to beat estimates at 332m, as rivals like Twitter and Facebook report declining users.
  • How’s its advertising biz holding up? Social media platforms saw declines in ad revenue thanks to Apple’s new privacy rules, but Snap created a new tool that’s now responsible for 90% of its direct ad revenue. But, now it’ll have to contend with things like war and inflation, leading customers to lower their advertising budgets.
  • Will Q2 end its streak though? Snap expects the current quarter to see revenue growth of up to 25% at the high end, missing expectations for 28%, though it beat estimates by forecasting DAUs of 344m. Analysts are still bullish despite growing macroeconomic headwinds, but let’s see how other social media platforms fare next week.
See all reported financials
Chris Li / Unsplash
Feb 042022

Snap goes on a streak

There’s #nofilterneeded for Snap's Q4 earnings, which send prices on their longest winning streak yet.

Key points:
  • Snap sent its stock up a whopping 46% in Friday morning trading, snapping back from a social media sell-off that prompted losses of 23% on Thursday. It was thanks to an easy earnings beat – it reported EPS of $0.22 on revenues that were up 42% to $1.3bn, and it topped it off by beating current quarter guidance estimates.
  • It was its first ever quarterly net profit, going a long way to show that it’s adjusting to Apple’s privacy changes, which caused a major drop in Q3 revenue and are still troubling other tech giants.
  • It’s showing super strong user growth, beating estimates with 319m daily active users (up 20% y-o-y) – it must expect the growth to continue given the 330m users it forecast for Q1.
See all reported financials
Illustration by TradingView
Jan 252022

A downgrade Snaps the back of investors

Wedbush thinks Snap is too weak to compete with growing rivals – does its dwindling stock mean investors agree?

  • Wedbush downgraded Snap from Neutral to Outperform and slashed its price target on the stock by over a third from $56 to $36 – prices ended Friday at $32.12.
  • It says that TikTok in particular is providing strong competition in the social platform space, and it doesn’t think Snap can keep up. Analysts also think headwinds from Apple’s privacy changes will be worse than estimated.
  • Wedbush’s bear note sent shares spiraling 11% in Monday intraday trading to hit their lowest price since October 2020. Snap is down 32% this year as tech stocks have faced pressure from monetary tightening and inflation.
Illustration by TradingView
Jan 142022

Oh Snap

Prices Snap, crackle and pop after a Cowen downgrade empties its bowl of optimism.

  • Snap shares spilt 10% on Thursday and hit their lowest levels since October 2020, now down over 18% this year alone.
  • A Cowen price-cut tipped the bowl. It downgraded the stock to outperform and lowered its price target from $75 to $45, citing the ongoing impacts of Apple’s ad-tracking changes last April.
  • The changes are already taking a toll on ad revenues because social media platforms now can’t measure the success of their adverts – Cowen also sees a decline in Facebook and Instagram’s market share.
April Walker / Unsplash
Oct 222021

Earnings force investors to Snap out of it

Snap stock sinks nearly 25% in after hours trading on Thursday after the social media platform releases third quarter earnings that felt the effects of Apple’s recent privacy changes.

Snap sees its shares plummet after hours on Thursday after reporting third quarter results that came in weak on revenue after its advertising business felt the weight of Apple’s recent privacy policy changes and the ongoing supply shortage. Snap reported earnings per share of $0.17 on revenue of $1.07 billion, compared to expectations of $0.8 in earnings per share on revenue of $1.10 billion. Daily active users (DUAs) globally increased to 306 million compared to the 301 million expected, and the company pulled in $3.49 in revenue per user through the quarter, down from the $3.76 analysts were hoping for.

Not only did Q3 come in weaker than expected, but it looks like the fourth quarter might be equally bleak looking, thanks to Apple’s recent privacy changes – which have already impacted the company’s revenue. Snap is expecting revenue next quarter to come in between $1.16 billion and $1.2 billion, when analysts were looking for a number more around the $1.4 billion mark. CEO Evan Spiegel said that since Apple’s recent privacy changes took effect, it has become increasingly difficult for its advertising business to understand how well their ads are performing, which is bringing down revenue. Rebuilding an advertising structure is at the top of Spiegel’s priority list, and he said:

This has definitely been a frustrating setback for us. But I think over the long term these privacy changes, and protecting privacy for users of iOS . . . is something that we fully support. We’ve certainly seen some early signs of success but it’s going to take a little while . . . The underlying performance of the advertising platform is still very strong.

Snap CFO Derek Andersen added:

Unfortunately, these changes are occurring during a season when our advertising partners would normally expect their supply chains to be operating at peak capacity, and at a time when we would otherwise expect peak advertising demand to drive peak contestation, and therefore peak pricing, in our auction.

Eric Seufert, a mobile ad technology consultant, says this is bad new for tech giants everywhere and will likely shine through in the earnings yet to come, saying:

Snap succumbed to the same forces that are wracking the entirety of the mobile advertising ecosystem, which have been catalysed by Apple’s privacy policy. It seems likely that Facebook will report similar business frictions on Monday.
Illustration by TradingView
Jul 262021

A snappy second quarter

Snap ends Friday 23% higher than it started, spurred on by an earnings release that reported the best user growth in four years.

Shares of social media giant Snap ended the week on a high, releasing its second quarter earnings and blowing away expectations. The company reported adjusted earnings per share of $0.10 on revenue of $982 million, compared to expectations of $0.01 in losses per share on revenue of $846 million. The stock was up over 16% before the bell, and opened at its highest price ever at $74.14, even flirting with the $80 mark before closing up just under 24% for the day. A big part of the jump was Snap’s user growth numbers, which were up 23% from the year before and reported 293 million daily active users (DAUs) compared to forecasts of 290 million, and the quick pic platform is earning $3.35 in revenue per user, compared to the $2.92 analysts expected.

Revenue was at its highest-ever level and its surge in daily active users was the best the platform had seen in four years, proving that Snap has been able to maintain the momentum it gathered during the pandemic, and keep up with the growing power of TikTok. The company had been wary of Apple’s iOS 14.5 update and the privacy changes it brought with it, but it looks like the update hasn’t had the catastrophic impact some were expecting.

We have written much about the strength of the online ad markets over the past 9 months...but even we under-estimated 2Q/3Q results. SNAP’s ad revenue strength was broad-based across use cases (Stories, Discover, lenses and AR, etc) as performance-focused innovation like improved matching, dynamic product ads, and new AR lenses are leading to increased advertiser and spend per advertiser growth,

Morgan Stanley analysts wrote in a Friday note. For the next quarter, Snap has forecast revenue of up to $10.08 billion.
May 212021

Partner summit push

Snap holds its Partner Summit, and partners are clearly impressed as the share price jumps up by just under 6%.

The event, which broke boundaries this year by doing the whole thing through augmented reality, brought with it a whole host of new updates that got investors feeling positive, along with the announcement that it has reached half a billion monthly active users. The updates covered a bunch of new features for the OG Snapchat app, its hardware, and its partnerships – including deals with YouTube and Unity Software, and an exciting deal with Walt Disney that will allow people to interact with augmented reality objects at Disney World.

Snap is clearly betting big on the whole augmented reality thing, also introducing new AR glasses and new app features that let you play around with the interactive experience – for anyone whose not entirely sure what augmented reality is all about, think Pokemon Go vibes, with computer-generated objects laid into an interactive real world environment. The company is hoping that investing in the AR scene will help it to capitalize on the e-commerce boom that’s taken over since COVID kept shoppers at home, with a lot of people turning to experiences that used AR to let you “try on” clothes or beauty products. Other big name companies have been getting involved too, with Facebook and TikTok introducing new AR features and investments, so it’s good to see Snap keeping up with the competition.