Snap Inc. will be reporting its financial results on Tuesday. This comes after the company recently announced a 10% reduction in its workforce. The announcement had an impact on the company’s stock, which saw a 2.1% decline after the job cuts were made public.
Snap, the parent company of Snapchat, made the decision to implement these job cuts in order to focus on their key priorities and ensure they have the necessary resources to support their growth in the long term.
Despite management’s conservative outlook, Wall Street analysts predict stronger results for Snap’s December quarter. The forecast suggests revenue growth of 2% to 6%, with adjusted earnings before interest, taxes, depreciation, and amortization ranging from $65 million to $105 million.
Overall, analysts tracked by FactSet expect Snap’s revenue to reach $1.38 billion, with adjusted EBITDA of $111 million and an adjusted profit of 6 cents per share.
Looking ahead to the March quarter, consensus estimates indicate revenue growth of 13% compared to the previous year, reaching $1.12 billion. However, an adjusted EBITDA loss of $21 million is anticipated.
For the year 2024, analysts are projecting Snap’s revenue to reach $5.286 billion, with an adjusted EBITDA of $320 million.
Snap Shares Rally as Analysts Remain Optimistic
Snap shares have experienced a significant increase of 75% since the last earnings report, attributed to several factors. NewStreet Research analyst Dan Salmon highlights the strong advertising market, investors’ excitement surrounding the ad partnership with Amazon.com, and positive feedback regarding the company’s execution and efficiency focused culture.
Considering the recent stock performance, Salmon believes that the price already reflects a “strong” beat in comparison to fourth-quarter results and management’s forecasts. To further propel the stock higher, he suggests that the upcoming guidance should indicate mid to high teens revenue growth. Salmon views this possibility as achievable, given the strength in advertising and the continued success of Snapchat+, the paid version of the platform. Therefore, Salmon maintains a Buy rating on Snap shares.
Similarly, Evercore ISI analyst Mark Mahaney remains optimistic about Snap’s results, considering the impressive numbers released by Meta and Alphabet last week. Mahaney also acknowledges a perceived conservatism in guidance. He emphasizes that there are evident signs of the ad demand environment warming up and sustaining momentum into 2024. Mahaney will closely analyze whether Snap demonstrates stability and sustained recovery in user engagement trends. With this in mind, he maintains an In Line rating on Snap shares.