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Snap Stock Down 7% Now, Snap Beats Expectations but Warns of Market Disruptions

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by Steve Muchoki · 3 min read
Snap Stock Down 7% Now, Snap Beats Expectations but Warns of Market Disruptions
Photo: NYSE / Twitter

With the coronavirus still a threat to our normalcy, Snap stock investors remain optimistic about the company’s ability to deliver better results in the coming quarters.

Snap Inc (NYSE: SNAP) stock extended yesterday’s dip during the pre-market session. After closing yesterday at $58.31, down 1.60%, Snap stock fell approximately 7% during the pre-market trading session.

Notably, the drop in Snap stock was attributed to the mixed fourth-quarter earnings results released on Thursday. Snap reported better than expected results but warned of possible disruptions caused by Apple’s privacy changes in iOS 14 to be introduced later in the first quarter.

During the last quarter of 2020, Snap reported adjusted earnings per share of 9 cents versus 7 cents to estimate by analysts according to a survey by Refinitiv. Notably, Snap recorded a revenue of $911 million during the fourth quarter earnings against an $857.4 million estimate by analysts.

The company reported global daily active users (DAUs) of 265 million versus an estimate of 257.79 million by analysts according to Refinitiv. According to FactSet, Snap had an average revenue per user (ARPU) of $3.44 against an estimate of $3.34.

Being one of the globally recognized social media platforms, Snap significantly benefited from the ongoing coronavirus pandemic. Snap stock jumped over 240% last year, thanks to the increased global customer base. Besides, Snap stock has added approximately 28.49%, 10.58%, and 10.14% during the past three months, one month, and five days respectively according to data provided by MarketWatch.

With the coronavirus still a threat to our normalcy, Snap stock investors remain optimistic about the company’s ability to deliver better results in the coming quarters. However, with a possible coronavirus vaccine likely to be approved by the United States FDA in the coming quarters, Snap products may experience low demand as people return to the normal daily routine.

Snap Stock and the Company’s Earnings Report

Having experienced a profitable 2020, Snap stock investors will closely be watching how the company performs in the first half of 2021. Reasons, several critical fundamental aspects will affect the company’s ability to collect revenue including Apple’s privacy changes in iOS 14.

In a note through the earnings report, Snap Chief Financial Officer Derek Andersen noted that the company expects year-over-year revenue growth of 56% to 60% for the first quarter. He, however, cautioned that it is not yet clear on the impact the Apple privacy changes in iOS 14 will be for the company.

“It is not clear yet what the longer term impact of those changes may be for the topline momentum of our business, and this may not be clear until several months or more after the changes are implemented,” Andersen said.

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Steve Muchoki

A financial analyst who sees positive income in both directions of the market (bulls & bears). Bitcoin is my crypto safe haven, free from government conspiracies. Mythology is my mystery! "You cannot enslave a mind that knows itself. That values itself. That understands itself."

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