Snap Stock Crashes Despite Impressive Growth

Snap Inc (ticker: SNAP) shares tumbled, shedding nearly 20 percent of their value on Thursday after its first ever quarterly earnings report as a public company disappointed investors. Still, some Wall Street analysts remain optimistic about the long-term prospects for Snap, the parent company of the popular messaging app Snapchat.

Despite a huge surge in revenue from $38.8 million in the first quarter of last year to $149.7 million in first quarter of 2017, Snap fell short of the average analyst revenue estimate of $158 million. Snap also reported a net loss of $2.21 billion, or $2.31 per share. Analysts had expected a loss of $1.92 per share.

Perhaps the most disappointing number of all for Snap investors was its 166 million daily active users, or DAUs. While that number is up 36.1 percent compared to a year ago, it was short of analyst expectations of 167.3 million DAUs and represents the third consecutive quarter of slowing growth. Snap reported daily average user growth of 47.7 percent in the fourth quarter and 62.8 percent in the third quarter of 2016.

Several Wall Street analysts remain bullish on the stock, which opened Thursday’s session within a dollar of its IPO price of $17 per share.

Oppenheimer upgraded Snap to “outperform” following the earnings report and believes Snapchat’s focus on “few-to-few communication” differentiates the platform from rivals Facebook (FB), Instagram and Twitter (TWTR).

“We believe this is an important distinction and will act as a durable competitive differentiator for Snapchat,” analyst Jason Helfstein says.

JMP Securities also maintains its “market outperform” rating on Snap.

“While we would have liked to have seen at least in-line DAU net additions in the quarter, engagement continues to ramp with users now averaging 30-plus minutes per day on Snapchat and the performance issues on Android impacting DAU growth appear to be improving as Android net adds doubled,” analyst Ronald Josey says.

Nomura is not as optimistic. The firm slashed its price target for Snap to $14 and said the stock faces “fierce competition from deeper-pocketed rivals including FB and continues to trade at a valuation that looks quite lofty to us.”

Snap investors dealing with huge losses on Thursday can take…

Click here to continue reading

Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common SenseI don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and is always available on your local internet!