Snap’s Stock To Trade Higher Post Q4 Results?
Snap’s stock (NYSE: SNAP) is scheduled to report its fiscal Q4 2021 results on Thursday, February 3. We expect Snap to beat the consensus estimates for revenues and earnings. The company has beaten consensus estimates for earnings for each of the last four quarters and revenue for three of the last four quarters. In the past year the company has increased engagement as daily average users continue to increase every quarter. In Q3 2021, the company launched new Discover Channels in 14 different countries, including 22 new channels in each of India and the U.K. For Q3 2021, Spotlight, the company’s newest platform surfacing the most entertaining Snaps from the community, saw content submissions doubled compared to the previous quarter. Further, Daily Average Users (DAU) were 306 million in Q3 2021, an increase of 57 million, or 23% y-o-y. We expect the same to drive the fourth-quarter FY2021 results as well.
Our forecast indicates that Snap’s valuation is $74 per share, compared to the current market price of $32. Our interactive dashboard analysis on Snap’s earnings preview has more details.
(1) Revenues expected to be marginally ahead of the consensus estimates
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Snap’s revenues for full-year 2020 were $2.5 billion – up 46% y-o-y, mainly due to growth in North America Advertising revenues as the digital form of advertising continues to garner higher demand. Trefis estimates Snap’s fiscal Q4 2021 revenues to be around $1.125 billion, just above the $1.12 billion consensus estimate. We expect the North America segment to continue to drive results. Our dashboard on Snap’s revenues offers more details on the company’s operating segments along with our forecast for the next two years.
2) EPS is likely to be above the consensus estimates
Snap Q4 2021 earnings per share (EPS) is expected to be $0.05 per Trefis analysis, above the consensus estimate of $-0.09. The company’s net loss decreased from $831.7 million in the first nine months of 2020 to $510.5 million in the first nine months of 2021 as they continue to work on improvement in their operating margin. We expect the net income margin to improve in FY2021 compared to the previous year.
(3) Stock price estimate higher than current market price
We arrive at Snap’s valuation, using an RPS estimate of $3.49 and a P/S multiple of 21.1x in fiscal 2022. This translates into a price of $74, compared to the current market price of around $32.
Check out how Snap Peers fare on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.
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| Returns | Jan 2022 MTD [1] |
2022 YTD [1] |
2017-22 Total [2] |
| SNAP Return | -32% | -32% | 120% |
| S&P 500 Return | -6% | -6% | 100% |
| Trefis MS Portfolio Return | -12% | -11% | 248% |
[1] Month-to-date and year-to-date as of 1/31/2022
[2] Cumulative total returns since the end of 2016
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