Snap (SNAP:NSD) Stock Crashes on Earnings

Snap Inc: (SNAP:NSD) Announces Layoffs, as Stock is Fundamentally Bearish

Snap Inc. Earnings

Snap Inc., the parent company of popular social media platform Snapchat, reported poor earnings for the first quarter of 2023, missing revenue expectations and causing the company’s shares to plunge by over 20% in after-hours trading. Snap reported revenue of $988 million, falling short of the expected $1 billion, and adjusted earnings per share of $0.01, compared to the anticipated -$0.05.

Snap’s struggles are largely attributed to a decline in advertiser spending, which has significantly impacted the company’s revenue. While Snap reported 383 million daily active users, in line with analysts’ expectations, the company’s average revenue per user fell to $2.58, lower than the expected $2.62 and down from $3.20 in the same period last year. The tighter digital advertising landscape, compounded by rising interest rates, has put pressure on Snap’s revenue streams.

In response to the disappointing earnings report, Snap CEO Evan Spiegel stated that the company is working to accelerate revenue growth and improve its advertising platform to drive increased return on investment for its partners. The company recently introduced Snapchat+, a subscription-based service that provides exclusive content and early access to new features, in an effort to diversify its revenue streams. Snap reported that 3 million users have signed up for Snapchat+ since its launch, with an annual run rate of over $100 million.

The majority of Snap’s revenue still comes from advertising, and the company’s struggles in this area.  The poor earnings report is a significant setback for Snap, which has been working to maintain its position as a leading social media platform. The company’s shares have already been under pressure in recent months. While the introduction of Snapchat+ is a step in the right direction, Snap will need to demonstrate sustained revenue growth and innovation in its advertising platform to regain investor confidence and compete with its rivals.

SNAP Stock Forecast & Analysis

Snap Inc. currently has a consensus rating of “Hold” based on a pool of 31 analysts’ ratings. The price target range for Snap, comes with a low estimate of $8.00 and a high estimate of $96.00. The average price target of the 31 analysts is $54.03, indicating a potential upside of around 50% from the current price.

11 analysts rating Snap as a “Buy,” 15 rating it as a “Hold,” and five rating it as a “Sell.” The most recent analyst rating update on StockTargetAdvisor was on April 20, 2023, when Morgan Stanley lowered its price target on Snap from $75 to $67, maintaining its “Overweight” rating.

 

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