Judul : What analysts are saying about Snap’s disastrous first quarter as a public company
link : What analysts are saying about Snap’s disastrous first quarter as a public company
What analysts are saying about Snap’s disastrous first quarter as a public company
Hollis Johnson
Snap founder Evan Spiegel.
Snap stock plunged more than 20% on Wednesday after the company announced a disappointing first set of financial results since becoming a public company.
Its Q1 revenue — $149.6 million (£116 million)— missed analyst expectations as user growth slowed for the photo-sharing company.
Snap added just 8 million new daily users in the first three months of the year, representing year-on-year growth of 36%. At this time last year, Snapchat was growing its DAUs by 52%.
Snapchat’s weak user growth comes as Facebook has intensified its mimicking of the Snapchat Stories format across its suite of apps. Instagram Stories recently outpaced Snapchat by reaching 200 million daily users.
Here are the key numbers from Snap’s Q1 results:
- EPS (adjusted): Net loss of $0.20 vs. $0.16.
- Revenue: $149.6 million vs. $159 million expected, up 286% from $39 million in the year-ago period.
- Daily active users: 166 million, an increase of 36% from 122 million in the year-ago period.
- Net loss: $2.2 billion
Read on to see what analysts had to say about the results …
William Blair: BULLISH
Rating: Outperform
Price target: N/A
Comment: “Shares of Snap are down about 23% in the aftermarket after missing the Street’s estimates on users, revenue, and EBITDA in its first reporting quarter since going public. In our view, most investors were focused on the company’s DAUs metric heading into the print with concerns about how competition from Facebook (FB $150.29; Outperform) might affect the metric. Snap’s slight miss on DAUs should not materially change the bull or bear debate on this topic, in our view. Recall, Snap’s strategy is largely DAU monetization versus trying to grow the DAU metric at a faster rate.”
Citi: BULLISH
Rating: Buy
Price target: $24
Comment: “Snap reported mixed 1Q17 results, with revenue in-line but Adj. EBITDA and DAUs missing Citi estimates. We expect pressure on the stock to continue near term as the 1Q17 report did little to address investor concerns over the growth outlook for users. That being said, we remain encouraged by other engagement KPIs, with avg. time spent on Snapchat now over 30 minutes per day (vs. 25-30 minutes previously reported), snaps taken per day growing to 3bn (vs. >2.5bn previously reported), and avg. sessions per day rising in the quarter. On the revenue front, Snap continues to make progress in campaign measurement and in automating ad buys – key steps in ensuring long-term revenue growth, and announced that 20% of Snap ads are now delivered programmatically. Though we expect the stock to trade down on these results, we continue to see the low rate of monetization and the high rate of engagement enabling revenue growth and margin leverage over the long-term. As such we maintain our Buy rating, but lower our price target to $24 from $27 due to near-term forecast revisions (see Fig. 2, page 3). With the stock trading down in the after-market, our ETR comes around 36%.”
Namora: SELL
Rating: Reduce
Price target: $14
Comment: “As we wrote in our initiation report, ‘The Ghosts of Slowing Growth,’ SNAP came to the public markets just as its user and monetization growth were both starting to meaningfully slow. It now faces incrementally fierce competition from deeper-pocketed rivals including FB, and continues to trade at a valuation that looks quite lofty to us, even considering yesterday’s aftermarket selloff. Some had thought SNAP’s initial quarters of monetization would follow more of a benign path given the potential for marketers to put experimental ad budgets to work on an app with a heavily engaged millennial user base, but YoY ad revenue/ARPU growth rates decelerated substantially once again, just as they did in the quarters leading up to the IPO. Revenue growth estimates will come down in our model, and as such, we maintain our Reduce rating and lower our Target Price to $14.”
Credit Suisse: BULLISH
Rating: Outperform
Price target: $30
Comment: “We expect the positive aspects of SNAP’s 1Q17 report (North America monetization, hosting cost leverage) to be overshadowed by the revenue and DAU miss, as this was certainly NOT in the script for its first report as a public company. And although we would certainly have preferred to have seen higher DAUs reported vs. our expectations and a higher reset to BOTH our revenue and Adj. EBITDA estimates, we settle for profit dollars for now, and our long-term investment thesis has not changed on the back of this report.”
Deutsche Bank: BULLISH
Rating: Buy
Price target: $23
Comment: “Snap reported strong trends in user engagement but the two most critical near term KPIs, DAU growth and ad revs, failed to live up to investor expectations in Snap’s important first quarter as a public company. We continue to believe in the management team’s ability to innovate on product and ultimately grow and monetize the user base. Given the rich valuation, the company needed to show faster DAU growth to better validate the long-term potential. While nothing in this quarter was thesis changing in our view, each quarter the company fails to surprise with faster DAU growth is likely to result in option value decay. We reduce out TP to $23 (from $30) but maintain our Buy rating.”
Goldman Sachs: BULLISH
Rating: Buy
Price target: $27
Comment: “Snap reported 1Q revenue of $149.6mn (+286% yoy vs. 406% in 4Q) and adj. EBITDA of ($188)mn versus our forecast of $137.6mn and ($200)mn, respectively. DAU net adds came in at 8mn, up from 5mn in 4Q, in line with our estimate of 8mn, driven by a doubling of net adds from Android devices (30%+ of net adds vs. 20% in 4Q). Revenue declined 10% QoQ due to seasonal and political advertising benefits in 4Q. While SNAP remains a near venture stage investment with all of the risks that implies, we continue to believe its audience and engagement represent a unique asset that will benefit from growth and diversification of internet usage and advertiser adoption as both mature. Therefore, we remain Buy rated.”
UBS: NEUTRAL
Rating: Neutral
Price target: $24
Comment: “The rapid pace of evolution in the Internet and Technology sectors could cause a shift in user behavior that diverts traffic away from Snap or reduces user engagement. This includes improvement in existing competitors’ offerings (Facebook, Instagram, Facebook Messenger, WhatsApp, Google+, WeChat, LINE, etc.), as well as the emergence of new competition. Furthermore, changes in how users access the Internet, including new form factors of hardware devices, new browsers, and new operating systems, could reduce Snap’s ability to generate revenue. Additional key risks include concentrated voting control, macroeconomic impacts on global advertising budgets, damage to the Snap brand (specifically pertaining to privacy concerns), currency fluctuations, interruption of information technology and communications systems (i.e., natural disasters, terrorism, denial of service attacks, etc.), and potential intellectual property claims.”
Bank of America Merrill Lynch: NEUTRAL
Rating: Neutral
Price target: $23
Comment: “We are encouraged by early signs of a rebound in Android user growth and growing user time spent, and we think Snap will effectively monetize its user base over the long-run. However, deceleration of user growth, competitive concerns, volatility due to absence of Street expectations management, and lock-up expiration are overhangs that are likely to continue. We reiterate our Neutral rating and lower our PO to $23 based on slightly lower user monetization estimates in our DCF.
Barclays: HOLD
Rating: Equal weight
Price target: $18
Comment: “1Q revenue exceeded our estimate but missed buyside expectations. The 7m DAU net-adds were not strong enough to disprove the ‘Facebook is crushing Snapchat’ thesis, which we think persists for a while. The problem with such a print right out of the gate is that there is little near-term valuation support given the lack of profitability and massive lock up expiration around the corner (ala TWTR early 2014). We still like the long-term backdrop for SNAP’s innovation and overall potential, and given the sharp pullback, we are getting more interested now the market is starting to discount a lower bar for future execution. We remain Equal-weight and wait for the dust to settle before initiating or adding to positions, our PT is $18.”
Read more stories on Business Insider, Malaysian edition of the world’s fastest-growing business and technology news website.
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