Snap's 'Ugly' Results A Forewarning For Meta Investors? Munster Throws Light On Q2 Results

Snap, Inc. SNAP reported disappointing second-quarter results Thursday and refrained from giving guidance for the running quarter.

Munster Terms Results Ugly: Snap commented that September quarter revenue is tracking flat with the year-ago period, belying consensus forecast for 18% growth, Loup Funds co-founder Gene Munster noted on Twitter. He described the results as “ugly.”

The good news is daily average users rose 18% to 347 million in the second quarter, the analyst said. He expressed disappointment at the founders creating a structure to protect their super-voting rights. “Feels tone deaf,” Munster said.

Read-across For Meta: Snap’s bigger rival Meta Platforms, Inc.’s META results are unlikely to be this bad but “prepare that there is risk,” Munster said. Meta is currently expected to report September quarter revenue growth of 4%, he noted.

Munster’s Takeaways From Earnings Call:

  • Demand has been weak due to a combination of macro factors and competition from TikTok, Meta and Alphabet, Inc.’s GOOGL GOOG YouTube.
  • The company said they need to see the macroeconomic conditions stabilize before growth can return.
  • The time spent with content is growing, as reflected by 9% impression growth but demand is not materializing.
  • The Street is estimating 22% growth for the December quarter and 33% growth in 2023. Munster expects the numbers to come to mid-single digits for the December quarter and around 10% for 2023.
  • Price Action: Snap shares plunged 26.79% to $11.97 in after-hours trading on Thursday.


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Posted In: Analyst ColorEarningsNewsSocial MediaAnalyst RatingsTechGeneralGene MunsterLoup Funds
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