Snap, Inc. (SNAP:NYE), the American camera and social media platform is scheduled to report its fourth quarter 2022 earnings on January 31. The company is facing headwinds due to the economic slowdown, as well as intense competition from TikTok. As a result, the company’s advertising revenues have declined and its Daily Active Users (DAUs) have slowed down.
To address these issues, Snap has taken cost-cutting measures such as reducing its workforce by 20% and adding new features to its platform to attract more users. The SNAP stock has gained 23.3% so far this year but lost 66.5% over the past year.
Analyst Brian White of Monness Crispi expects the macroeconomic scenario to worsen this year and views Snap’s outlook as subdued. Despite higher revenue and earnings expectations compared to the Street, the analyst still forecasts a significant slowdown in growth compared to Snap’s historical numbers. White maintains a Hold rating on the SNAP stock and projects Snap’s DAUs to grow 18% YoY to 377 million in Q4, a slower pace of growth than its historical average of roughly 20%.
Wall Street analysts have a moderate outlook for Snap stock with a Moderate Buy consensus rating based on three Buys and five Holds. The average price target of $12.17 implies an 11.6% upside potential from current levels.
In conclusion, while Snap is facing challenges due to decelerating advertising revenues, there is still a reason for optimism. The company must find new and innovative ways to attract and retain advertisers and find new sources of revenue, but with its large user base and investments in new technology, Snap is well-positioned to overcome this challenge and succeed in the future.