Snapchat stock has suffered serious losses since they reported their third quarter fiscal 2021 earnings results. The stock is down over 50% from it’s all-time-highs back in September 2021. Now let’s take a closer look and see what Snapchat has in store for its upcoming fourth quarter fiscal 2021 earnings results.
Third Quarter Fiscal 2021 Earnings Highlights:
- Revenue was $1,067 million, up 57% year-over-year.
- Reported a net loss of $72 million, an improvement of 64% year-over-year.
- Free Cash Flow was $52 million, compared to $70 million in the prior year.
- DAUs were 306 million, up 23% year-over-year.
Financial Guidance:
During the third quarter the company issued their fourth quarter fiscal 2021 earnings guidance. They estimate revenue between $1,165 million and $1,205 million, with adjusted EBITDA between $135 million and $175 million. After the company reported earnings the stock plummeted more than 20% on Apple’s iPhone privacy changes which disrupted their advertising business.
Evan Spiegel, Snapchat’s CEO said in a statement: ‘’While we anticipated some degree of business disruption, the new Apple-provided measurement solution did not scale as we expected. This made it more difficult for our advertising partners to measure and manage their ad campaigns for iOS.’’
Snap Stock Downgrade:
On Jan 24th, 2022 Snapchat was downgraded by Wedbush Securities from ‘’outperform’’ to ‘’neutral’’ rating with a $36.00 price target. Wedbush analyst Ygal Arounian sees near term headwinds with Apple’s privacy changes, and rising competition from social media apps like Tiktok. Rising interest rates also do not favor high growth, unprofitable tech stocks like Snapchat.
So is Snap Stock a Buy or Sell?
During 2021, Snapchat saw a meteoric rise during easy money fed policies. The company has made significant improvements in their user growth metrics, revenue and net loss in the prior year. However, Snapchat is facing near term headwinds with rising competition and Apple’s privacy changes.
Snapchat’s advertising business may be affected in the short run, putting increased pressure on the stock. With the stock down more than 50% from it’s all-time highs, it could present a good buying opportunity in the long term. But proceed cautiously ahead of its fourth quarter fiscal 2021 earnings results.
Disclosure: The author holds no position in Snapchat Inc. Freedom Stocks has a disclosure policy.
