Snap Q1 Earnings


Hello monkeys,

As you guys might have known already, Snap just reported its first quarterly financial results.

And boy oh boy, all these short sellers are making a killing. Suffice to say, Snap screwed up. Shares are down more than 25 percent in after-hours trading.

The company spent $2.0 billion on stock-based compensation expenses after its initial public offering, widening net losses for the quarter to $2.2 billion.

The numbers

Revenue: $150 million reported vs. $158 million expected by a Thomson Reuters consensus estimate.
Global DAUs: 166 million reported vs. 167.3 million expected by StreetAccount.
Analysts at Thomson Reuters estimate an adjusted loss of 20 cents per share, wider than the 19 cents expected.

What do you guys think about the future of Snap? They're actually trading around their initial valuation of $17 now; where do you see the prices going?

My opinion: I do think Snap has to really do something about Facebook and Google. The latter two are going to keep out-innovating Snap with their diversified businesses, and it would be interesting to see how Snap responses, especially as they just released new features before their earnings report today.

EDIT: Saw this interesting article at Seeking Alpha. Here's what Stone Fox Capital had to say:

The bigger issue was that revenues missed analyst targets of $158 million.

Still, the market can get past missing estimates with 286% revenue growth. The problem though is that Snap doubled the losses in the process.

The cleanest figure provided by the social company is the adjusted EBITDA number. Snap lost $188 million this year after losing $93 million last Q1. Snap has to triple revenues with minimal cost increases to reach breakeven EBITDA.

This scenario doesn't seem likely with minimal user growth. Snap saw DAUs grow to 166 million during Q1, up 5% sequentially for the quarter.


Comments (19)

May 10, 2017 - 6:46pm

I just posted a thread on this over here: Sorry, checked for this but didn't see your thread!

I'm kicking myself - was actually using SNAP as a way to research investing, literally read hundreds of pages of EDGAR filings and news about the company, and I was only trading on paper this time around. But my conviction since IPO has been that it's way overvalued, and it was destined to break out of its $20-23 band on a decline once Q1 2017 came out.

Now, having not just made 25% returns in the course of an hour, I am kicking myself hard.

EDIT: OP, I think you're right about facebook/google. The thing is, a lot of "cool" tech companies are pioneering nifty ideas, but they don't have any cash cow part of their business to fund their risk taking. And so, in a world awash with cheap private capital chasing diminishing returns, they have found a temporary haven in the deep pockets of VC funds.

Long term, I don't think private capital has an appetite to burn their investment funds while behemoths like Google, with an annual cash cushion the size of their mature ad revenue business, compete with them.

Good ideas with shallow moats will come from the minds of young guys with poor business acumen, like Evan Spiegel. And then the players with cash to burn will be the ones to actually slog it out in the trenches for the next few years and win the long-term game of turning the idea into a profitable model.

May 12, 2017 - 12:41pm

Thanks for the comment, smart ass.

Part of what I do professionally is draft and revise things like prospectuses and other EDGAR filings. Not only does this make me better/faster at reading through them than people like you (read: with short attention spans and a phobia for legalese), but also, it makes me more aware of the relevant details that are buried in these documents but are nonetheless relevant to the analysis.

People like you are literally the reason why people like Paulson were able to make a killing in '08 simply by digging into bond prospectuses and using their brains. Your analysis is superficial - just enough to parrot back the findings of your research department to a client so that you can pass as knowledgable, but not enough to have your own insights on the matter.

You do recognize that there's more to a company than the numbers and what the wire agencies are publishing, right? There's a lot about how management regards their own company buried between the lines in these filings. There's a lot to be gleaned from listening to the investor calls yourself, and noting not only the substance, but the style in which the discourse takes place.

For instance, do you know that Spiegel noticeably tripped up verbally on two responses in the earnings call? Nobody is commenting on that, but it was clear to me as someone with a modicum of social IQ that he was not prepared for the question about expansion in China/Japan, for instance.

EDIT: ToWhomItMayConcern, you realize that the current CEOs of the following banks all started out as white shoe lawyers, right. Which is to say, they read every line of the proverbial prospectus when making a decision:

-Goldman Sachs
-Morgan Stanley

May 10, 2017 - 7:28pm

You know, two people I personally dislike are Evan Spiegel and Adam Levine. Evan Spiegel, well, you already mentioned the reason. I mean who wouldn't fuck cat woman (dunno, Kerr's face reminds me of a cat tbh).

As for Adam, it's just that the guy has to show he's married to Behati Prinsloo every chance he gets. She's there in quite a few songs, while the rest of the band is non-existent. I mean, Maroon 5 ain't just Levine you know. In fact, Larry Fink is more important to Maroon 5 than Adam. Arrogant ass.

End rant.

GoldenCinderblock: "I keep spending all my money on exotic fish so my armor sucks. Is it possible to romance multiple females? I got with the blue chick so far but I am also interested in the electronic chick and the face mask chick."
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