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Headline Risk Grows For Snap Ahead Of Q3 Print

Headline Risk Grows For Snap Ahead Of Q3 Print
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Shares of Snap Inc (NYSE: SNAP) lost around 1.50 percent Monday morning following a report that demand for the company's Spectacles are notably below expectations. Snap is sitting on hundreds of thousands of Spectacles in warehouses, reported The Information, citing two people close to the company.

But Snap's troubles in its new hardware business isn't the only concerning headline plaguing the stock heading into its third-quarter earnings report on Nov. 7. Separately, 18 people have been laid off at Snap's recruiting division, and the company plans to cut back on its new hiring in 2018, Business Insider reported. This report is consistent with tracking data on open job listings at Snap that were conducted by Deutsche Bank's Lloyd Walmsley.

However, investors shouldn't necessarily read too much into a hiring slowdown, Walmsley said in a research report. Reductions in recruiting are consistent with the company's recent weak business performance, and to a certain extent, a slowdown in hiring could be due to seasonality.

Nevertheless, while not necessarily a surprise, Snap's new hiring plans confirms a view that the company "continues to struggle" in convincing marketers to scale already existing ad budgets, the analyst wrote.

Walmsley maintains a Hold rating on Snap's stock with an unchanged $17 price target.

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Feb 2019Raymond JamesUpgradesUnderperformMarket Perform
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