Snap Inc. (SNAP) is scheduled to report results of its third fiscal quarter after market close on November 7, with a conference call scheduled for 5:00 pm ET. This will be the third quarterly report issued by the parent of Snapchat since the company came public in March of this year. What to watch for: 1. USER GROWTH: With its last report, Snap reported that its Daily Average Users, or DAUs, had grown to 173M, up 21% year-over-year and up 4% quarter-over-quarter. Any sign of slowing in user growth or engagement has a great potential to send the stock lower. 2. ‘NOT SHUTTING DOWN,’ NOT SELLING SHARES: This morning, Snap co-founder and CEO Evan Spiegel, in response to rumors that Snapchat is shutting down this month, tweeted: “Nope. Not shutting down.” Spiegel ended a two-year Twitter hiatus to label the story “fake news.” In addition to refuting the rumor of an imminent end to the service, Spiegel previously said on the company’s Q2 earnings call that he and co-founder and CTO Robert Murphy will “not sell any of our shares this year.” Spiegel added at that time that he and Murphy “believe deeply in the long-term success of Snap.” 3. SPECTACLES: On September 22, Bloomberg reported that Snap’s hardware lab, which developed the company’s Spectacles glasses, had made about a dozen job cuts after Mark Randall was appointed as head of the lab. The cuts, which were primarily in marketing roles, came after former head Steve Horowitz shifted to another role within a different part of the company, according to the report. More recently, The Information reported that Snap has been left with “hundreds of thousands” of unsold Spectacles sitting in warehouses after the parent of Snapchat “badly overestimated” demand for the camera-enabled glasses, citing two people close to the company. 4. WEDBUSH BEARISH ON REVENUE: Recently, Wedbush analyst Michael Pachter predicted that Snap’s Q3 revenue will miss the consensus forecast of $238M by about $20M, projecting just $212M based on his estimate of worldwide average DAUs of 181M as of the end of Q3 and total ARPU of $1.17. The analyst, who sees superior targeting and scale and similar ad formats from competitors limiting Snapchat’s future growth, keeps a Neutral rating and $12 price target on Snap shares.
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