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Snapchat Woes Mount, eMarketer Cuts 2018 Revenue Forecast

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Snap Inc. (SNAP - Free Report) , the parent of camera application Snapchat, has been in troubled waters for quite some time now. The latest slash in ad revenue forecast by market research firm, eMarketer bears testimony to the fact.

The research firm has projected Snap’s ad revenues in the United States for the current year to be $662.1 million, down from $1.03 billion projected in March. Moreover, the firm anticipates that the company will not be able to cross the $1 billion mark in U.S. ad revenues until 2020.

Though Snap’s shift to an automated or programmatic ad delivery system has increased the number of advertisers on the platform, it has resulted in lower ad prices, which is the primary reason behind the downgrade.

Although revenues on a year-over-year basis are expected to rise 18.7% in the current year, the figure is way below last year’s growth of 85.6%. A rebound in revenues in the next two years is however expected by the firm.

Moreover, the firm has also lowered projection for UK ad revenues. Snap is now expected to generate £68.4 million in UK ad revenues, compared with £104.8 million projected in March.

However, Snap’s UK ad revenues are expected to nearly double this year from £35.5 million generated last year.

In its report, eMarketer further added that Snapchat currently accounts for 0.5% of UK’s digital ad market, up 20 basis points from 2017. However, the platform is way behind Alphabet’s (GOOGL - Free Report) Google and Facebook (FB - Free Report) , which control 39.1% and 21.7% of the digital ad market in the UK, respectively.

Snap Inc. Revenue (Quarterly YoY Growth)

Snap Inc. Revenue (Quarterly YoY Growth) | Snap Inc. Quote

Other Snippets from the Report

Coming to user growth, eMarketer predicts that Snapchat’s monthly active users (MAU) in the United States will increase 7% year over year to 84.8 million at the end of 2018. The growth is higher than that of Facebook and Twitter (TWTR - Free Report) , which is anticipated to grow 0.9%, but is lower than Instagram’s 13.1%.

Moreover, per the firm, in the user group aged 12-17, Snapchat will add 1.2 million new users by 2022, while Facebook will lose 2.2 million users in that demography.

eMarketer also predicts that Snapchat’s MAUs in the UK will increase 8.6% year on year to 16.2 million, surpassing Facebook and Twitter’s 2% and 1.9% growth respectively. However, the platform will trail Instagram, which is anticipated to grow 9.7%.

Snap currently has a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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