Snap just reported a surprise revenue growth: here’s what analysts are saying

Snap Inc (NYSE:SNAP) is trading up in extended hours after reporting a surprise revenue growth for its fiscal third quarter.

Snap issued upbeat guidance as well

The stock is being rewarded also because the guidance impressed as well.

Snap now sees revenue of $1.32 billion and $1.375 billion in the current financial quarter. Analysts, in comparison, were at $1.34 billion instead. Still, Mark Shmulik – a Bernstein analyst said in a research note today:

Progress on ad technology has been offset by spend decline from top advertisers. Time spent [on the app] also appears to be challenged domestically.

His market-perform rating on Snap stock is coupled with an $11 price target which, nonetheless, suggests a 16% upside versus its previous close.

Loop Capital analyst shares his view on Snap

Snap agreed in its press release that the Israel-Hamas conflict has resulted in some advertisers choosing to pause spending.

On the plus side, the social media company added about one million new subscribers to its premium paid service in the recently concluded quarter. Snapchat+ now has over 5 million users in total. On CNBC’s “Power Lunch”, Rob Sanderson of Loop Capital said today:

At social media networks, lifeblood that keeps them going is user engagement and user growth. At Snap, these appear to be very solid. Ad tech can be fixed, you can improve monetisation.

Sanderson sees upside in Snap stock to $14 which represents a whopping 45% upside on its previous close.

Snap third-quarter earnings snapshot

• Lost $368 million versus the year-ago $360 million
• Per-share loss also increased from 22 cents to 23 cents
• Revenue jumped over 5.0% year-on-year to $1.19 billion
• Consensus was 24 cents a share loss on $1.11 billion revenue
• Ended the quarter with 406 DAUs – in line with estimates

What else was noteworthy in the earnings print?

Also on Tuesday, Snap said Jerry Hunter – its Chief Operating Officer has decided to retire after serving the company for seven years.

The Santa Monica-headquartered firm authorised up to $500 million worth of stock repurchase today. It ended the quarter with $3.6 billion in cash, equivalents, and marketable securities.

CEO Evan Spiegel attributed the Q3 strength partially to cost cuts the company executed earlier this year. In the press release, he said:

We’re focused on improving our advertising platform to drive higher return on investment for our partners, and we have evolved our go-to-market efforts to better serve them and drive customer success.

Snap did close its ARES business in September as well.

The post Snap just reported a surprise revenue growth: here’s what analysts are saying appeared first on Invezz