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The Sell-Side Sentiment On Snap Ahead Of Its First-Ever Earnings Report

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The Sell-Side Sentiment On Snap Ahead Of Its First-Ever Earnings Report

Snap Inc (NYSE: SNAP) is scheduled to report its first earnings report as a public company after Wednesday's market close.

It doesn't seem like much time has passed since Snap's highly publicized IPO on March 2 when the stock opened for trading at $17 a share, above the marketed $14 to $16 price range. After hitting a post-IPO high of $29.44, the stock lost all momentum and drifted to a post-IPO low of $18.90. But since then the stock has rebounded above the $20 per share mark and was trading near $23 per share one day prior to its first earnings report.

Here is a complete summary of notable developments since the March IPO.

Wall Street's First Rating

Within mere hours of Snap's IPO, the company received its first Sell rating from analysts at Pivotal Research Group.

Pivotal's Brian Wieser initiated coverage of the social media company with a Sell rating and $10 price target. The analyst acknowledged Snap could be a successful company, but he does have serious concerns over the stock's valuation and the only reason why the stock is trading at high levels is because investors are wrongly assuming "the next person will pay more for it."

Within days the ratings from other Wall Street analysts quickly poured in with a mostly-bearish sentiment, making the stock a candidate for perhaps Wall Street's most un-loved stock.

Wall Street's Most Bearish Analysts

Here is a selection of analysts who recommend selling (or avoiding) Snap's stock:

  • Analysts at Nomura initiated Snap with a Reduce rating and $16 price target.
  • Analysts at Atlantic Equities slapped an Underweight rating on Snap's stock with a $14 price target.
  • Analysts at Needham initiated coverage of Snap with an Underperform rating.
  • Analysts at Cantor Fitzgerald initiated coverage of Snap with an Underweight rating and $18 price target.

Neutral Analysts

Here is a selection of analyst reports that aren't bearish — but aren't bullish either:

  • Analysts at Aegis Capital initiated coverage of Snap's stock with a Hold rating and $22 price target.
  • Analysts at Mizuho initiated coverage of Snap's stock with a Neutral rating and $20 price target.
  • Analysts at Loop Capital initiated coverage of Snap's stock with a Hold rating and $21 price target.

The Few Bullish Reports

Snap has earned the respect and support of a select few analysts who are encouraging investors to buy shares of the company:

  • Analysts at Monness Crespi Hardt initiated coverage of Snap's stock with a Buy rating and $25 price target.
  • Analysts at Drexel Hamilton initiated coverage of Snap's stock with a Buy rating and $30 price target.

Millennials Prefer Snapchat Over Others

Despite Snap's struggling stock price, the fact remains the social media platform is preferred over its peers among millennials.

Gene Munster, a notable Wall Street analyst turned venture capitalist, found that Snapchat's real-time story is the most attractive feature of any platform, including all of Facebook Inc (NASDAQ: FB)'s properties. This led Munster to conclude that Snapchat's camera is key to its growth.

"If Snap slows on its vision as a camera company, Facebook will likely catch them," Munster argued.

Munster's findings echo those of analysts at Piper Jaffray. The firm's bi-annual "Taking Stock With Teens" survey found that nearly 40 percent of teens prefer Snapchat over every other social media platform.

Final Thoughts Before The Report

Heading into Wednesday's earnings report, investors should be reminded of a few key developments since Snap's IPO.

First, Snap has been no stranger to FIS Astec Analytics' list of the hottest stocks among short sellers.

Second, Snap is heading into the report suffering from sour investment sentiment, as Facebook's Instagram property is seeing encouraging growth metrics from new features that are essentially copied from Snap.

Third, Snap's attempts to open up its platform to demographics beyond its core teen and millennial base could be a sign of the company no longer becoming the "Garden of Eden of privacy." Naturally, investors will be paying close attention to this during the earnings report and conference call for any signs of deterioration in the platform's most compelling feature among users: the ability to remain private.

Related Links:

Snap Inc Suffering From Sour Sentiment Heading Into First Public Earnings Report

A Snapshot Of Snap Inc's First Earnings Report

Latest Ratings for SNAP

DateFirmActionFromTo
Oct 2019Initiates Coverage OnNeutral
Oct 2019UpgradesNeutralBuy
Oct 2019UpgradesNeutralBuy

View More Analyst Ratings for SNAP
View the Latest Analyst Ratings

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