Analysts predict that Snap Inc. may find itself in a challenging position within the digital advertising industry as the company prepares to release its fiscal second-quarter results. While ad spending is expected to increase, experts are unsure if any player other than Meta Platforms Inc. or Alphabet Inc. will reap the benefits.
UBS analyst Lloyd Walmsley recently raised his price target for Snap shares from $10 to $14. However, he maintained a hold rating on the stock and expressed skepticism about witnessing a significant growth in second-quarter revenue. Walmsley also highlighted concerns about the third-quarter prospects for small and medium-sized businesses on Snap’s new AI platform and their ability to counteract the ongoing disruption caused by major advertisers or brand weaknesses.
Goldman Sachs analyst Eric Sheridan followed a similar path, increasing his price target for Snap to $8 from $7. Sheridan, too, expressed caution by slightly lowering his medium-term revenue growth estimates due to execution risks associated with Snap's rebuild of its direct-response business.
Anticipated Results
Earnings: Analysts tracked by FactSet project Snap to report an adjusted earnings loss of 25 cents per share, indicating a decline compared to last year's loss of 2 cents per share. The average estimate from Estimize, which collects projections from hedge funds and academics, among others, predicts a loss of 4 cents per share.
Revenue: According to the FactSet consensus, Snap's second-quarter revenue is expected to reach $1.05 billion, which is slightly lower than the $1.11 billion reported in the same period last year. Contributors to Estimize also anticipate revenue of $1.05 billion.
Stock Movement: Although Snap's stock has gained 42% this year, it lags behind competitors like Meta and Yelp Inc., which have experienced growth rates of 142% and 51%, respectively. Nevertheless, Snap has outperformed Google parent Alphabet, which saw a 38% increase in its stock price over the same period. In contrast, the S&P 500 has achieved a 19% gain in 2023.
NEXT POST
