Jefferies Says Snap's Engagement 'Remains Robust'

A disappointing earnings report and plunge in the stock price represent is a perfect opportunity to take a long-term chance on Snap Inc SNAP, a Jefferies analyst said Friday.

“Near-term issues hang on the stock, but we believe patient investors should look through the noise at the long-term opportunity,” Brian Fitzgerald said in a note. “We are lowering our numbers in the near-term on weaker pricing.”

Snap Tumble Continues

Fitzgerald maintains a Buy rating and lowered his price target to $16. Snap closed at $13.77 Thursday and was down to $12.17 in after-hours trading, a plunge of 11.62 percent.

“Pricing in the near-term will be weak as they use pricing as a lever to continue to on board additional advertisers to build out robust demand for Snap Ads,” Fitzgerald said. “Additionally, Snap will face pressure from employees being able to sell shares for the first time since IPO.”

“Lastly, we feel that SNAP's unwillingness to provide Street guidance will continue to be a disservice to shareholders as estimates continue to fluctuate wildly and it introduces unneeded uncertainty into results (even an overly conservative guidance would be appreciated).”

Thursday afternoon, Snap Inc reported quarterly earnings for only the second time as a public company.

The social media upstart reported an earnings loss of 36 cents per share (adjusted to a 16-cent loss) from sales of $181.67 million, against estimates of a 15-cent loss and $186.22 million in revenue.

Snap added about 7 million daily active users during the quarter; Q2 total DAUs came in at 173 million, about 2 million short of estimates.

Related Link: Snap Misses Q2 Estimates; Adds 7 Million Daily Active Users