Is Snap Inc (SNAP) Just a “One Trick Pony?” GBH Insights Sets 3Q Expectations

Daniel Ives places Snap's success in ability to magnetize DAU gains and monetize/engage installed base.


Snap Inc (NYSE:SNAP) shares were falling almost 3% yesterday with caution rising ahead of this evening’s third quarter earnings upshot. Considering how the popular Snapchat app parent company’s first and second quarterly performance fared after having gone public just eight months prior (a.k.a. underwhelming), Street expectations for the third quarter have already dipped from $280 million down to $237 million. Likewise, consensus has set expectations for a loss, anticipating EPS of ($0.32).

GBH Insights analyst Daniel Ives has some optimism for a company that very much is “still a work in progress,” finding that even though the tech stock continues to be “a ‘prove me’ name,” at least “slowly” but surely, Snap is “moving in the right direction.”

Ahead of this evening’s quarterly print, the analyst reiterates an Attractive rating on Snap stock with a price target of $18, which represents a close to 21% increase from current levels. (To watch Ives’ track record, click here)

Ives writes, “With the company not issuing guidance, Street expectations are all over the map and based on our ad checks in the quarter we are expecting revenue of $225 million and a EPS loss of ($0.25). The main focus of the Street will be the company’s DAU additions in the quarter which we believe were 9 million giving SNAP total DAU of roughly 182 million exiting the quarter. While we are expecting a modestly successful DAU this quarter, growth has slowed significantly in 2017 vs. 2016 as the company is on a trajectory to add roughly 30 million DAU this year vs. 50 million+ in 2016. The SNAP story going forward comes down to DAU growth and most importantly the ability to monetize and engage the company’s platform, which continues to be its Achilles heel and remains a hot button issue for investors that have patiently waited for the company’s ad growth initiatives to take hold.”

As far as this analyst is concerned, a lot of pressure is riding on this quarter to help the company garner “credibility with the Street.” Is Snap a “one trick pony” or can CEO Evan Spiegel step up Snap’s engagement and ad growth into a future relevant playing field? All Street eagle eyes are watching tonight.

Wall Street is not convinced Snap has staying power just yet in the tech battleground, as TipRanks analytics showcase SNAP as a Hold. Out of 28 analysts polled by TipRanks in the last 3 months, 8 are bullish on Snap stock, 15 remain sidelined, while 5 are bearish on the stock. With a return potential of nearly 2%, the stock’s consensus target price stands at $15.07.