Snap Inc. (SNAP) is scheduled to report results of its first fiscal quarter after market close on April 22, with a conference call scheduled for 5 pm ET. What to watch for:
1. USER GROWTH AND GUIDANCE: With its last report, Snap said Daily Active Users, or DAUs, were 265M in Q4, an increase of 47M, or 22%, year-over-year.
"DAUs increased sequentially and year-over-year in each of North America, Europe, and Rest of World. DAUs increased sequentially and year-over-year on both iOS and Android platforms. On average, Snapchatters opened Snapchat 30 times every day in Q4 2020," Snap noted.
Snap also said at that time: "As we look forward to Q1, we estimate that Daily Active Users will grow year-over-year in Q1 at a rate of approximately 20% to reach 275 million. On the revenue side, if we are able to sustain the momentum we have observed in recent weeks, we believe that a revenue growth rate approximately equal to what we reported in Q4 could be attainable in Q1. That said, our guidance range is for year-over-year revenue growth of 56% to 60%, and this range reflects our best estimate of the potential impact of interruptions to demand associated with the iOS platform changes that we anticipate will be implemented in the final month of the quarter."
2. ANALYSTS 'CONSTRUCTIVE' AND POSITIVE...: On April 20, MKM Partners analyst Rohit Kulkarni kept his Buy rating and $83 price target on Snap ahead of its Q1 results. The analyst stated that intra-quarter data points that include analyst day commentary, political ad spend disclosure, Apple launch delays, and app downloads suggest that there is a greater likelihood of a "beat and in-line" quarter, despite recent trends of rising Street estimates. Kulkarni further expects Snap to add about 10M daily active users during Q1, adding that he would view greater than 1M net adds in North America DAUs as a "clear positive".
On April 19, JPMorgan analyst Doug Anmuth said he remains positive on Snap shares into the company's Q1 results. He believes Snap's up 56%-60% revenue guidance should prove conservative and models for 61% year-over-year growth, but acknowledges that investor expectations "have likely crept higher" with the stock up 23% since March 30. Anmuth keeps an Overweight rating on Snap with an $82 price target.
On April 16, Piper Sandler analyst Thomas Champion said he is "constructive" on Snap shares into the Q1 print. The company continues to monetize new features of the platform and remains under-monetized versus peers, Champion told investors. The shares are down 9% off the highs from February, when management guided to several years of 50%-plus sales growth, he noted. The analyst reiterated an Overweight rating on Snap with an $83 price target.
On April 13, Wedbush analyst Ygal Arounian upgraded Snap to Outperform from Neutral with a price target of $75, up from $52, as the analyst assumed coverage of the name. Arounian views Snap as "uniquely positioned" as a video-centric platform with a younger, digitally native audience. The company has gained traction with advertisers and has improving momentum coming out of the pandemic, added Arounian.
3. ...BUT BOFA NOT SO MUCH: A month ago, BofA analyst Justin Post downgraded Snap to Neutral from Buy with a price target of $67, down from $78. The analyst still expects the company to beat on Q1 results and accelerate growth in Q2, but he reduced his forward sales estimate multiple to 20-times from 23-times to reflect the higher interest rate outlook and said he expected the stock to trade in a "range-bound" way.
