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Snap Inc (SNAP) to Report Q1 Earnings: What's in the Cards?
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Snap, Inc. (SNAP - Free Report) is set to report first-quarter 2017 results on May 10. This is the first time the company is reporting its quarterly results after its IPO on Mar 2. Let’s see how things are shaping up for this announcement.
Earnings Whispers
Our proven model shows that Snap is likely to beat on earnings because it has the right combination of the two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.
Zacks ESP: Snap currently has an Earnings ESP of +42.49%. This is because the Most Accurate estimate is pegged at a loss of $1.34 and the Zacks Consensus Estimate is pegged at a loss of $2.33. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Snap has a Zacks Rank #3. The combination of Snap’s Zacks Rank #3 and Earnings ESP of +42.49% makes us confident in looking for an earnings beat this quarter.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Factors at Play
User growth will be the key area of focus for investors, along with revenue growth.
Snap, the parent company of social network, Snapchat, had a brilliant debut. The company’s IPO was multiple times oversubscribed and shares soared 44% on the first day of trading.
Many analysts believe that product innovation might help Snap to sustain the momentum.
The best part about the company is that it does not follow the usual advertising model of charging per click. Instead, it charges advertisers per day. The consistently expanding daily active user base has been attracting more and more consumers.
Apart from this, the company’s Snapchat Discover feature has enhanced its picture and video library, thereby attracting more advertisers. The feature also allows the company to partner with major events like the Oscars and Super Bowl. Discover currently accounts for a majority of the company’s advertising revenues. It recently opened a self-serve platform for its ad products.
On the other hand, most analysts are cautious on the stock as they argue that Snap has already started observing its average daily user growth rate slowdown. Analysts have related slowdown in user growth for the social media platform to the popularity of Instagram stories, a blatant rip-off of Snapchat’s hallmark feature. As a matter of fact, media reports have quoted Snapchat “admitting” that increasing competition from big players like Facebook , which have better resources, is a big threat as they can easily lure users to their platform.
Moreover, Snap is yet to make profits. Though the company’s revenues are on the rise, losses are ballooning. Reportedly, in 2016, Snap’s revenues of $404.5 million were nearly six times higher than 2015 revenues, but net loss for the year increased 38% to $514.6 million.
Since Mar 2, the company’s shares declined 5.31% compared with the Zacks Internet Software industry’s gain of 7.36%.
Stock to Consider
Here is a stock that, as per our model, has the right combination of elements to post an earnings beat this quarter:
The Priceline Group Inc has an Earnings ESP of +2.16% and a Zacks Rank #3.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
Image: Bigstock
Snap Inc (SNAP) to Report Q1 Earnings: What's in the Cards?
Snap, Inc. (SNAP - Free Report) is set to report first-quarter 2017 results on May 10. This is the first time the company is reporting its quarterly results after its IPO on Mar 2. Let’s see how things are shaping up for this announcement.
Earnings Whispers
Our proven model shows that Snap is likely to beat on earnings because it has the right combination of the two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.
Zacks ESP: Snap currently has an Earnings ESP of +42.49%. This is because the Most Accurate estimate is pegged at a loss of $1.34 and the Zacks Consensus Estimate is pegged at a loss of $2.33. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Snap has a Zacks Rank #3. The combination of Snap’s Zacks Rank #3 and Earnings ESP of +42.49% makes us confident in looking for an earnings beat this quarter.
Snap Inc. Price and EPS Surprise
Snap Inc. Price and EPS Surprise | Snap Inc. Quote
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Factors at Play
User growth will be the key area of focus for investors, along with revenue growth.
Snap, the parent company of social network, Snapchat, had a brilliant debut. The company’s IPO was multiple times oversubscribed and shares soared 44% on the first day of trading.
Many analysts believe that product innovation might help Snap to sustain the momentum.
The best part about the company is that it does not follow the usual advertising model of charging per click. Instead, it charges advertisers per day. The consistently expanding daily active user base has been attracting more and more consumers.
Apart from this, the company’s Snapchat Discover feature has enhanced its picture and video library, thereby attracting more advertisers. The feature also allows the company to partner with major events like the Oscars and Super Bowl. Discover currently accounts for a majority of the company’s advertising revenues. It recently opened a self-serve platform for its ad products.
On the other hand, most analysts are cautious on the stock as they argue that Snap has already started observing its average daily user growth rate slowdown. Analysts have related slowdown in user growth for the social media platform to the popularity of Instagram stories, a blatant rip-off of Snapchat’s hallmark feature. As a matter of fact, media reports have quoted Snapchat “admitting” that increasing competition from big players like Facebook , which have better resources, is a big threat as they can easily lure users to their platform.
Moreover, Snap is yet to make profits. Though the company’s revenues are on the rise, losses are ballooning. Reportedly, in 2016, Snap’s revenues of $404.5 million were nearly six times higher than 2015 revenues, but net loss for the year increased 38% to $514.6 million.
Since Mar 2, the company’s shares declined 5.31% compared with the Zacks Internet Software industry’s gain of 7.36%.
Stock to Consider
Here is a stock that, as per our model, has the right combination of elements to post an earnings beat this quarter:
Nexstar Media Group, Inc. (NXST - Free Report) has an Earnings ESP of +29.63% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Priceline Group Inc has an Earnings ESP of +2.16% and a Zacks Rank #3.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>