When Snap's (SNAP) first-ever earnings as a public company come out after Wednesday's closing bell, Wall Street analysts will hope to get more than just a snapshot of the company's current and future financial health.
TheStreet will be hosting a live blog analyzing Snapchat's earnings report on Wednesday afternoon. Please check our home page for more details.
It's been a little over a month since the parent company of the disappearing snap went public in March, when Snap's stock rocketed 44% above their IPO price of $17 a share. Since then, the stock has experienced its fair share of ups and downs, as Facebook (FB) released a slew of Stories-like products, ratcheting up the competition between the social media giants. Other investor concerns have focused on the fact that Snap's revenue stream is largely ad-supported, while some brands continue to view the company as being a part of their experimental ad spending budget.
Snap shares were down 1.3% on Wednesday morning to $23.01, below their closing price of $24.48 on the company's first day of trading on March 2. On Tuesday, shares jumped about 3% as the company introduced a number of new features, including looping and persistent videos.
For the fiscal first quarter, Wall Street expects Snap to post a loss of 21 cents per share on revenue of $158 million. Several analysts have said they remain optimistic that Snap will post strong results, despite failing to become profitable so far, and will either meet or exceed consensus estimates for the quarter. Of the 32 analysts who cover the stock, 17 have Hold ratings, nine maintain a Buy rating and six have the equivalent of a Sell rating, according to FactSet.
Snap will have to show Wall Street that it can grow its users and monetization.
"Although Snap's revenue growth rate is the highest in our coverage universe (still an early growth phase), fierce competition from Facebook (Instagram Stories now boast 200 million-plus daily active users) means that Snap's DAU number and the pace of deceleration will be important areas of scrutiny," said Cantor Fitzgerald analyst Kip Paulson in a Monday note. "We believe sequential DAU and monetization growth throughout 2017 will be key in determining the future growth curve of Snap and whether it's likely to mimic Facebook or Twitter (TWTR) in its user/advertiser appeal."
Paul expects Snap's DAU to come in at 175 million, with DAU growth decelerating to 43.7% year-over-year from growth of 47.7% in the 2016 fourth quarter. JMP Securities analyst Ronald Josey was slightly more bearish, projecting Snap will reach 167 million DAUs during the first quarter, representing 37% growth year-over-year.
Both Josey and Paul expect Snap to see triple-digit, year-over-year advertising revenue growth of 248% and 359%, respectively.