Snap (SNAP) stock crashed to a record low Wednesday on a first-quarter earnings report that missed views on revenue, user growth and several other key metrics, as analysts slashed price targets.
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"Snap delivered a massive miss across the board which will further ignite fears that this company has major challenges ahead with its app redesign and business model in limbo," wrote Daniel Ives, head of technology research at GBH Insights.
The company is in damage-repair mode as it attempts to bring back users that quit the Snapchat app and joined the Instagram platform of Facebook. It also recently fumbled the introduction of camera-equipped sunglasses.
Shares were down 21%, near 11.10, during afternoon trading on the stock market today, a new low-water mark. The company held its initial public offering in March 2017, pricing shares at 17. They popped 44% on the first day of trading, closing at 29.44.
The Facebook (FB) rival reported revenue of $230.66 million, up 54% from the year-ago quarter. That missed the consensus estimate of $243.6 million. Revenue was down 19% sequentially, primarily due to seasonality and a redesign of the Snapchat app, the company said.
"Snap posted the lowest top line growth it has seen as a public company and user metrics show more trouble ahead in a quarter where digital advertising was posting robust growth," wrote Jefferies analyst Brent Thill, who maintained a hold rating on Snap but lowered his price target to 14 from 17.
Cowen analyst John Blackledge cut his price target to 10 from 12, with an underperform rating. RBC Capital Markets analyst Mark Mahaney cut his price target to 17 from 21.
Overhauling Its App
The company recently overhauled its app in the midst of intense competition from Facebook. Facebook has steadily copied the most popular features of Snapchat and added them to Instagram.
Snap reported having 191 million daily active users, an increase of 4 million from the fourth quarter but below estimates of 194 million. The company said average revenue per user rose 34% from the year-ago period to $1.21, while analysts were expecting $1.25. It was down 21% sequentially.
Snap's quarter ended with cash and equivalents of $1.8 billion. Capital expenditures increased to $36.3 million in the quarter, up from $18 million in the year-ago period and down from $21 million in the fourth quarter.
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The post Snap Dives To Record Low As First-Quarter Earnings Disappoint Investors appeared first on Investor's Business Daily.
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