Snap, the parent company of Snapchat, made headlines as it announced a 10% reduction in its workforce. This decision comes as the social-media giant seeks to prioritize its key objectives and secure investment for future growth. Snap’s financial results, eagerly awaited by investors, are set to be revealed on Tuesday.
Despite positive fourth-quarter advertising results at Meta Platforms, the parent company of Facebook and Instagram, Snap’s stock experienced a setback. Following the news of job cuts in a recent securities filing, shares fell approximately 2.1% on Monday.
Wall Street analysts are anticipating a stronger performance from Snap than originally forecasted. The company’s own projections for the December quarter anticipate a revenue increase of 2% to 6%, ranging between $1.32 billion and $1.375 billion. Additionally, adjusted earnings before interest, taxes, depreciation, and amortization are expected to range from $65 million to $105 million.
The consensus among analysts tracked by FactSet predicts revenue of $1.38 billion, with adjusted Ebitda of $111 million and an adjusted profit of 6 cents per share.
Looking ahead to the March quarter, estimates suggest revenue growth of 13% compared to the previous year, totaling $1.12 billion. However, an adjusted Ebitda loss of $21 million is also expected during this period. The Street consensus for 2024 predicts revenue of $5.286 billion and adjusted Ebitda of $320 million.
Snap’s upcoming financial report will provide valuable insights into the company’s performance and shed light on its plans for future growth.
Snap Shares Surge as Advertising Market Strengthens
Snap Inc.’s shares have seen an impressive 75% increase since the company’s last earnings report. This surge can be attributed to multiple factors, including a robust advertising market, excitement surrounding Snap’s ad partnership with Amazon.com, and positive feedback about their improved execution and efficiency-focused culture.
According to NewStreet Research analyst Dan Salmon, Snap’s current stock price already reflects strong performance relative to fourth-quarter results and management forecasts. To push the stock even higher, future guidance will need to demonstrate revenue growth in the mid to high teens. Salmon believes this outcome is possible due to the company’s solid advertising performance and the growing popularity of Snapchat+, the platform’s paid version.
Salmon maintains a Buy rating on Snap shares, highlighting his confidence in their potential.
Analyst Mark Mahaney from Evercore ISI also predicts that Snap’s results will surpass Street estimates. He bases this prediction on the strong financial performance of both Meta and Alphabet last week, as well as some perceived conservatism in Snap’s guidance. Mahaney’s main focus will be on whether Snap displays indicators of stability and sustained recovery in user engagement trends.
Mahaney continues to rate Snap shares as In Line.
In conclusion, Snap Inc. is experiencing a notable surge in share value, driven by a thriving advertising market. Both analysts, Salmon and Mahaney, recognize Snap’s potential for further growth and maintain positive ratings on the stock.