Snap Inc. (NYSE: SNAP) engages in the operation of its camera platform that helps people to communicate through short videos and images. The company is also involved in the provision of advertising by helping its partners generate a return on their investment by creating engaging advertising products. Its products include Snapchat, Publisher Tools, and Spectacles.
The company was founded by Frank Reginald Brown IV, Evan Thomas Spiegel, and Robert C. Murphy in July 2011 and is headquartered in Venice, CA. The company was originally named Snapchat Inc. upon its inception, but it was rebranded on September 24, 2016, as Snap Inc. in order to include the Spectacles product under a single company.
SNAP monetizes its business primarily through advertising. Its advertising products include Snap Ads and Sponsored Creative Tools like Sponsored Lenses and Sponsored Geofilters, and measurement services.
On November 7th, the company announced results for the quarter ended September 30, 2017. SNAP delivered another quarter of muted performance. While revenues grew on QOQ and YOY basis, expenses are increasing disproportionately. Therefore, the company cannot find positive income.
Snap’s lower than expected revenues were contributed to by relatively slower user growth as well as deceleration in the growth average revenue per user (ARPU), indicating a slowdown in user engagement.
On the flip side, the company still has comfortable liquidity and financial flexibility; The Company doesn’t have significant debt. The balance sheet continues to remain firm with over $3 billion in stockholders’ equity. Furthermore, SNAP has managed to avoid liabilities through the progressive sale of more stock, and investments.
Moreover, on the business front, the company has been focused on making progress against performance, quality, and automation this year, and is beginning to see the results of these efforts. Application performance has increased and has made meaningful progress against key customer-facing metrics.
Also, to attract more Android users, The Company is building a new version of its Android application from the ground up that it will launch in select markets before rolling it out widely.
Considering factors mentioned above, 2018 could be a productive and exciting year for SNAP, with many changes coming to its products and platform. The management is expected to be hard at work delivering on its priorities; user growth, content, and augmented reality.
The analysts covering the stock are suggesting a buy on the dip approach for SNAP but with caution, as a few more quarters of earnings misses could impinge the company’s stock performance significantly.
Other recent Operational highlights:
- Daily active users (DAU) (1) – DAUs grew from 153 million in Q3 2016 to 178 million in Q3 2017, an increase of 25.2 million or 17% year-over-year. DAUs increased 4.5 million or 3% quarter-over-quarter, from 173 million in Q2 2017.
- Average revenue per user (ARPU) (2) – ARPU was $1.17 in Q3 2017, an increase of 39% over Q3 2016 when ARPU was $0.84. ARPU increased 12% over Q2 2017 when ARPU was $1.05.
- Hosting costs per DAU – Hosting costs per DAU were $0.68 in Q3 2017, as compared to $0.64 in Q3 2016 and $0.61 in Q2 2017.
- Capital expenditures – Capital expenditures were $25.9 million in Q3 2017, as compared to $17.2 million in Q3 2016 and $19.4 million in Q2 2017.
- Excess inventory and related charges – In Q3 2017, SNAP recorded $39.9 million of costs related to Spectacles inventory, primarily related to excess inventory reserves and inventory purchase commitment cancellation charges.
2nd Quarter 2017 Financial Results:
Revenue and Profitability:
- Revenue was $207.9 million, an increase of 62% year-over-year. While SNAP’s advertising business is still in its early stages, in the three months ended September 30, 2017, the company recorded revenue of $207.9 million as compared to revenue of $128.2 million for the same period in 2016, representing a 62% year-over-year increase.
- In the nine months ended September 30, 2017, it recorded revenue of $539.3 million as compared to revenue of $238.8 million for the same period in 2016, a 126% year-over-year increase.
- Net loss for the three and nine months ended September 30, 2017, was $443.2 million and $3.1 billion, respectively, as compared to $124.2 million and $344.7 million, respectively, for the same periods in 2016.
Liquidity:
- Cash, cash equivalents, and marketable securities were $2.3 billion as of September 30, 2017, primarily consisting of cash on deposit with banks and highly liquid investments in U.S. government and agency securities.
Key risk factors and potential stock drivers:
The company generates substantially all of its revenue from advertising. To increase advertising revenue, it needs more users. Counter-intuitively, the company is struggling to produce that user growth.
The failure to attract new advertisers, the loss of advertisers, or a reduction in how much they spend could harm business and in turn stock performance.
SNAP’s business is highly competitive. It faces significant competition that it anticipates will continue to intensify. If the company is not able to maintain or improve its market share, its business could suffer.
Analysts current opinions.
|
|||||
|
|||||
|
|||||
|
|||||
|
|||||
|
|||||
|
|||||
|
|||||
|
Stock Chart:
- On Monday, November 13th, 2017, SNAP is trading at $12.48 (-2.23%) on volume of 9.6 million shares exchanging hands. Market capitalization is $15.37 billion. The current RSI is 35.57
- In the past 52 weeks, shares of SNAP have traded as low as $11.28 and as high as $29.44
- At $12.48, shares of SNAP are trading below its 50-day moving average (MA) at $14.76.
- The present support and resistance levels for the stock are at $12.43 & $12.96 respectively.
Welcome to Traders News Source
Our track record speaks for itself…
Traders News Source recent profiles and track record, 487% in verifiable potential gains for our members on 3 small cap alerts alone! These are just three examples from over two dozen winners this year.
January 31st, 2017 (NASDAQ: HIMX) opened at $5.10/share and hit a high of $9.68/share March 24th, 2017 for gains of 89% within 60 days- http://finance.yahoo.com/news/himax-technologies-review-4q-2016-130000319.html
May 23rd, 2016- (NYSE: XXII) opened at $.87/share hit a high of $3.03/share so far our member potential gains- 248% – http://mailchi.mp/tradersnewssource/updates-5-of-our-profiles-for-212-400-and-whats-coming-next?e=[UNIQID]
October 31st, 2017 (NASDAQ: PYDS) Although we have been covering this security for over a year, our recent coverage October 31st, 2017 opened at $1.45/share hit $4.10 within three days for gains of over 150%- http://mailchi.mp/tradersnewssource/update-pyds-back-in-the-value-zone-with-news-out?e=[UNIQID]
So, if you’ve been on the fence, perhaps it’s time to start doing some research and verify our numbers for yourself. We are constantly raising the bar and separate ourselves from the rest of the small-cap newsletters as the best in business.
We know with a large following comes a large responsibility as we have everyone from institutional investors to the beginner following our profiled securities in our newsletter. This is something we take very seriously always seeking small cap growth companies that have both near and long-term potential for our members.
Big Opportunities Trading Small Cap Stocks
***Get our small cap profiles, special situation and watch alerts in real time. We are now offering our VIP – SMS/text alert service for free, simply text the word “Traders” to the phone number “25827” from your cell phone***
Disclaimer
Traders News Source is a wholly owned subsidiary of Traders News Source LLC, herein referred to as TNS LLC.
Traders News Source has not been compensated for this report by anyone and the opinions if any are that of the author Vikas Agrawal, CFA. Author’s Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I, wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in the article.
This web site, published by TNS LLC, and is an investment newsletter that is built on the premise of assisting individual investors in learning about investing. Our goal as publishers of financial information is to provide research and analysis of investments to our subscribers. TNS LLC does not give buy or sell recommendations. We do purchase distribution rights from analyst, financial writers and bloggers for a fee that may be licensed to issue price targets and recommendations. Furthermore, we encourage you to speak to a licensed professional prior to making an investment in any type of publicly traded security.
We do sell advertising to other companies including brokerage firms, web sites, publicly traded issuers, investor relations firms, and investment publications, among others. TNS LLC makes no warranty as to the policies of these organizations, and in no way endorses their offers, services, or the content of their advertisements.
When an advertiser is a publicly traded company or a third party acting on behalf of a public company, we fully disclose all compensation in the email advertisement. Such disclosure is included in a disclosure statement in each of the advertisements sent via email.
17B Disclosure
Our reports/releases are a commercial advertisement and are for general information purposes ONLY. We are engaged in the business of marketing and advertising companies for monetary compensation. Never invest in any stock featured on our site or emails unless you can afford to lose your entire investment. The disclaimer is to be read and fully understood before using our services, joining our site or our email/blog list as well as any social networking platforms we may use.
PLEASE NOTE WELL: TNS LLC and its employees are not a Registered Investment Advisor, Broker Dealer or a member of any association for other research providers in any jurisdiction whatsoever.
Release of Liability: Through use of this website viewing or using you agree to hold TNS LLC, its operator’s owners and employees harmless and to completely release them from any and all liability due to any and all loss (monetary or otherwise), damage (monetary or otherwise), or injury (monetary or otherwise) that you may incur. The information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data. TNS LLC encourages readers and investors to supplement the information in these reports with independent research and other professional advice. All information on featured companies is provided by the companies profiled, or is available from public sources and TNS LLC makes no representations, warranties or guarantees as to the accuracy or completeness of the disclosure by the profiled companies. None of the materials or advertisements herein constitute offers or solicitations to purchase or sell securities of the companies profiled herein and any decision to invest in any such company or other financial decisions should not be made based upon the information provide herein. Instead TNS LLC strongly urges you conduct a complete and independent investigation of the respective companies and consideration of all pertinent risks. Readers are advised to review SEC periodic reports: Forms 10-Q, 10K, Form 8-K, insider reports, Forms 3, 4, 5 Schedule 13D.
TNS LLC is compliant with the Can Spam Act of 2003. TNS LLC does not offer such advice or analysis, and TNS LLC further urges you to consult your own independent tax, business, financial and investment advisors. Investing in micro-cap and growth securities is highly speculative and carries an extremely high degree of risk. It is possible that an investor’s investment may be lost or impaired due to the speculative nature of the companies profiled.
The Private Securities Litigation Reform Act of 1995 provides investors a ‘safe harbor’ in regard to forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact may be “forward looking statements”. Forward looking statements are based on expectations, estimates, and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through use of words such as “projects”, “foresee”, “expects”, “will”, “anticipates”, “estimates”, “believes”, “understands”, or that by statements indicating certain actions & quote; “may”, “could”, or “might” occur.
Understand there is no guarantee past performance will be indicative of future results. In preparing this publication, TNS LLC has relied upon information supplied by its customers, publicly available information and press releases which it believes to be reliable; however, such reliability cannot be guaranteed. Investors should not rely on the information contained in this website. Rather, investors should use the information contained in this website as a starting point for doing additional independent research on the featured companies. The advertisements in this website are believed to be reliable, however, TNS LLC and its owners, affiliates, subsidiaries, officers, directors, representatives and agents disclaim any liability as to the completeness or accuracy of the information contained in any advertisement and for any omissions of materials facts from such advertisement. TNS LLC is not responsible for any claims made by the companies advertised herein, nor is TNS LLC responsible for any other promotional firm, its program or its structure.
