Furthermore, SNAP had guided earlier in late-July that it expects its revenue to rise by +58-60% in Q3 2021, so the company's Q3 sales growth also fell short of management guidance. Also, while Snap Inc.'s YoY top line expansion of +57% seemed decent on an absolute basis, it represented a significant deceleration as compared to the company's Q2 2021 YoY sales growth of +116%. SNAP's non-GAAP adjusted earnings per share jumped significantly from $0.01 in Q3 2020 to $0.17 in Q3 2021, while its revenue expanded by +57% YoY to $1.07 billion over the same period as per the company's Q3 2021 results press release.īut SNAP's top line in the third quarter came in -3% below the sell-side analysts' consensus sales forecast, and this was the first time in seven quarters that the company had failed to meet market expectations in terms of its revenue growth. On the surface, Snap Inc.'s 3Q 2021 financial performance appeared to be very good. The company's shares already dropped by -27% in a single day to close at $55.14 on October 22, 2021, after it reported Q3 2021 earnings on the previous day after trading hours. SNAP's share price has fallen by -34% from $75.11 as of Octoto $49.26 as of Novemin the past one month. Given that it is difficult to determine when Snap Inc.'s revenue growth momentum can recover, it is tough to have a positive view of the company's shares at the moment, which makes a Neutral rating fair. Snap Inc.'s Enterprise Value-to-Revenue multiple has come down to close to its three-year historical average, but the stock's revenue growth expectations are also more modest now. With the market having less confidence in Snap Inc.'s ability to generate strong revenue growth in line with the goals it set at its February 2021 Investor Day, SNAP's valuations have de-rated significantly in line with a substantial share price correction in the last one month. In the current article, I review Snap Inc.'s third quarter earnings and assess its future financial outlook, and determine if the stock is attractive as a potential investment candidate now.Īpple's ( AAPL) iOS privacy changes have led to SNAP's Q3 2021 actual revenue and its Q4 2021 revenue guidance coming in below market expectations. My prior update for SNAP was published on Augafter the company reported its Q2 2021 results. ( NYSE: SNAP) following the company's Q3 earnings drop and subsequent stock price correction. I maintain my Neutral rating for Snap Inc. Justin Sullivan/Getty Images News Elevator Pitch
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