This Analyst Doesn’t Think Snap Inc (SNAP) Stock Worth The Cheap Price

Snap misses across the board for Q3 earnings, stock gets whacked; Brian Wieser reiterates a Sell.


Snapchat maker Snap Inc (NYSE:SNAP) missed Wall Street’s expectations for its third-quarter as a public company, sending its stock diving more than 17% in Wednesday trading session.

The number of daily Snapchat users only increased by 5 million from the second quarter; analysts were expecting that number to go up by 8 million. Snap also fell short of the Street’s revenue expectations. And the company’s net loss ballooned to $443 million, a spike of 257% from a year earlier.

In reaction, Pivotal Research analyst Brian Wieser reiterates a Sell rating on Snap shares, with a price target of $8.00, which represents a potential downside of 36% from where the stock is currently trading. (To watch Wieser’s track record, click here)

Wieser wrote, “Following on yesterday’s 3Q17 results from Snap, we have reviewed the company’s 10-Q for the same period and made some adjustments to our model. On the positive side, with three quarters of reported results behind the company we now have better data on share issuance vs. our expectations at the time of the company’s IPO, and trends are more conservative than we initially forecast. After 1Q17’s 27mm RSU grants, the company only issued 12mm in 2Q17 and 11mm in 3Q17. If the last two quarters represent a steady-state of dilution, the company is currently issuing shares equal to around 4% of the outstanding fully diluted total on an annualized basis vs. what we previously feared might be more like 10% around this point in time. We have also modified share-based compensation expense in our model to reflect a new lower trading price vs. our prior model.”

As far as the troubled social media giant’s verdict on the Street, it is a toss-up among analysts, as TipRanks analytics exhibit SNAP as a Hold. Out of 29 analysts polled in the last 3 months, 7 are bullish on Snap stock, 15 remain sidelined, and 7 are bearish on the stock. With a return potential of nearly 8%, the stock’s consensus target price stands at $13.48.