Snap Inc (NYSE:SNAP) third-quarter earnings report was another failure on a long, downward path for the social media company as user growth slowed under the pressure of Instagram. Snap added 5 million daily active users to reach 178 million with a 3 percent growth rate, slower than the 4.2 percent growth that got it to 173 million DAU in Q2.
Snap missed on revenue that reached $207.9 million with a loss of $0.14 earnings per share. That’s compared to Wall Street’s estimates of 237 million in revenue and a loss of $0.15 EPS.
Snap shares reacted to the disappointing earnings report, diving nearly 16% and shaving $3 billion off market cap in late trading.
Drexel analyst Brian White commented, “Although Snap continues to struggle with its quarterly financial results and still trying to find its footing, we believe in the platform and the big opportunity in front of the company. Moreover, Snap continues to grow at a rapid pace, introduce new innovations, roll-out compelling content and remain true to its core base of millennial followers.”
“Snap followed its modus operandi and did not provide any guidance. For 4Q:17 we are modeling sales of $306.8 million (Street is at $305.4 million) and a loss per share of $0.16 (Street is at a loss of $0.14). For 2018, we are estimating revenue of $1.67 billion (Street is at $1.58 billion) and a loss per share of $0.59 (Street is at negative $0.52),” the analyst continued.
White reiterates a Buy rating on Snap shares, with a price target of $30, which implies a potential upside of nearly 100% from the stock’s last closing price. (To watch White’s track record, click here)
Most of the Street is less confident than White’s bullish stance, with TipRanks analytics showcasing SNAP as a Hold. Based on 28 analysts polled in the last 3 months, 8 rate a Buy on Snap stock while 15 maintain a Hold, and 5 recommend a Sell. The 12-month average price target stands at $15.07, marking a slight downside from today’s closing price.