Just over two weeks after Twitter, Inc. (ticker: TWTR) reported horrendous second-quarter numbers that sent shares tumbling to their lowest level in months, Snap Inc. (SNAP) shares plummeted to new all-time lows on Friday after the company’s own quarterly earnings report missed the mark.
After a disastrous first few months on the public market, perhaps the only silver lining for Snap investors is that their outlook isn’t as bad as Twitter’s. At least not yet it isn’t.
Snap fell short of Wall Street’s expectations across the board in the second quarter. The company reported an adjusted earnings per share loss of 16 cents, revenue of $181.7 million and an uptick of 7 million in daily active users. Consensus analyst forecasts had called for an EPS loss of 14 cents on revenue of $186.2 million and 8 million DAU additions.
TWTR and SNAP’s struggles underscore the impressive execution at rival social media giant Facebook, (FB), which continues to consistently exceed growth expectations. But while Facebook remains the gold standard of social media stocks, investors are left with a tough decision in picking a distant runner-up between Snap and Twitter.
Snap has stumbled out of the block since its March IPO, and a pattern of slowing growth and earnings misses is certainly concerning. However, at this point, Snap investors have more reason for optimism than Twitter shareholders.
On Thursday, Citi analyst Mark May said Snap has several key long-term advantages over Twitter. While Twitter reported no net user additions in the second quarter, Snap’s user base is already twice the size of Twitter’s and is still growing at an impressive clip. In addition, Snap has consistently reported better user engagement numbers than Twitter and has much more room for improvement in terms of average revenue per user.
May says all these factors make Snap a better long-term investment than Twitter, but buyers will have to tolerate the company’s growing pains in the near-term.
“Investors are more focused on DAU growth versus the ARPU/monetization opportunity at Snap, and quarterly results could weigh on sentiment [or] the stock,” May wrote.
Other Wall Street analysts aren’t convinced that either stock is a worthwhile investment. On Friday, Global Equities Research analyst Trip Chowdhry called…
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 Sense. I 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 tradingcommonsense.com is always available on your local internet!
