Are investors Snap happy after results?
Analysts have given their verdict on Snap as its share price soared after it blew past revenue expectations in its fourth-quarter results.
The social-media company, shares of which have languished in a long-term downtrend, also pointed to a stabilising user base, helping to diminish a primary concern held by investors.
Analysts cheered the results, with Snap getting at least one upgrade and a number of price target increases. However, the analysts said the company continues to face a number of long-term uncertainties surrounding its ability to grow its user base and fend off competition. As RBC Capital Markets wrote: "Things clearly getting less worse, but are they getting better?"
Aaron Kessler from analysts Raymond James has upgraded the stock to market perform from underperform, citing the stabilising trends in daily active users (DAUs), and adding that a redesign of its Android app "could drive an improvement in 2019". Kessler also sees "continued solid ad growth," and an "outlook for improved ebitda performance with continued solid top-line growth and relatively flat" operating expenses. Despite being more positive on the company's fundamentals, the company's valuation and "continued competition concerns (eg, Instagram) limit our enthusiasm."
Goldman Sachs' Heath Terry felt that "the monetisation growth we saw in the quarter was evidence of the platform's longer-term potential, particularly as the company continued to innovate." He sees "considerable monetisation potential and scarcity value in Snap".
Nomura Instinet's Mark Kelley said that "the two most positive pieces of the 4Q story were that the user base stabilised, and the redesigned Android app has been rolled out selectively after a fairly long wait."