Analyst Provides First Glance on Snap Inc. (SNAP) 1Q:18 Earnings Miss


Snapchat operator Snap (NYSE:SNAP) reported first-quarter results tonight, and investors were not happy about it; shares fell 16% in after-hours trading. The company delivered total revenue of $230.7 million, falling short of Street’s expectations of $244.3 million. The all-important daily active users (DAUs) rose sequentially to 191 million, also shy of analysts’ projections of 194 million DAUs. GAAP EPS of ($0.30) came in slightly below the Street’s ($0.29) estimate.

In reaction GBH analyst Daniel Ives slashed his price target on SNAP from $24 to $14, while keeping his rating at Highly Attractive. (To watch Ives’ track record, click here)

Ives commented, “We view 1Q as a major setback in gaining credibility with the Street, proving that this “one trick pony” cannot expand its tentacles and increase engagement/ad growth potential into 2018 and beyond with the app redesign the key variable in our opinion. While this app redesign is the right move in our opinion, there has been clear backlash to this strategy based on petitions and other wide ranging negative commentary (e.g. Kylie Jenner situation) among SNAP’s core user base over the last few months, which must be successfully hand held through this design change and evolution of the platform, otherwise it could backfire and alienate “power users” of the platform thus remaining a clear risk on the story. It all comes down to monetization in our opinion, and SNAP’s 1Q speaks to the Everest like uphill climb the company has ahead of itself to turn this platform and growth trajectory around.”

Most of Wall Street is surveying the troubled social media giant from the sidelines, with TipRanks analytics demonstrating SNAP as a Hold. Based on 24 analysts polled in the last 3 months, 6 rate a Buy on Snap stock, 11 maintain a Hold, while 7 issue a Sell on the stock. The 12-month average price target stands at $14.75, marking a nearly 11% upside from today’s closing price. 

 

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