American camera and social media platform Snap, Inc. (NYSE:SNAP), is scheduled to report its Fiscal fourth quarter 2022 results on January 31, after the market closes. The Street expects SNAP to post an adjusted loss of $0.11 per share on revenues of $1.31 billion. In contrast, Snap reported an adjusted profit of $0.22 per share on revenues of $1.30 billion in Q4FY21.
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Snap has witnessed its revenues and Daily Active Users (DAUs) decline meaningfully owing to the stiff competition from the likes of TikTok as well as the overall economic slowdown, which is limiting its customers’ advertising spending.
To address these issues, the company has initiated restructuring measures, including a 20% workforce reduction to curb expenses and boost the bottom line. Further, the company is constantly innovating and adding new features to its platform to attract more users. SNAP has gained 23.3% so far this year, compared to losing 66.5% over the past year.
Analyst’s View on Snap
Analyst Brian White of Monness Crispi expects the macroeconomic backdrop to worsen this year. The five-star analyst’s view on SNAP remains subdued. Interestingly, White’s revenue and earnings expectations are higher than Street’s. Nonetheless, the estimates still forecast a considerable deceleration in growth compared to SNAP’s historical numbers. Accordingly, White maintains a Hold rating on SNAP stock.
White noted that Snap is facing both internal and external headwinds. “Apple’s privacy initiatives, most notably App Tracking Transparency (ATT), tripped up Snap more than its peers. Also, a weakening global economy has weighed on digital ad spending, resulting in depressed growth and fierce competition from larger platforms,” the analyst added.
Importantly, White projects Snap’s DAUs to grow 18% year-over-year to 377 million in Q4, implying a slower pace of growth compared to its historical average of roughly 20%.
What is the Price Target for Snap Stock?
Overall, Wall Street analysts have a dim outlook for social media stocks. On TipRanks, Snap has a Moderate Buy consensus rating based on three Buys versus five Hold ratings. Also, the average Snap price target of $12.17 implies 11.6% upside potential from current levels.
