- The report for the IV quarter of 2020 will be published after the end of today's auctions (February 4);
- Forecast revenue: $ 849 million;
- Expected profit per share: $ 0.0687.
Over the 200% SNAP Inc rally (NYSE: SNAP) over the past 12 months shows the success of a social network, which is not further struggling for existence in 2018. In today's financial statement for the fourth quarter, investors will search for information on whether the company can maintain the growth rate of the user base and income.
The California company SNAP, which owns a mobile application to send disappearing photos and Snapchat messages, has become one of the main beneficiaries of the pandemic, since more and more people communicate in a digital format. As a result, advertisers are forced to spend money on advertising on social networks. In the third quarter, SNAP sales rose 52%, while the number of daily active users during this period was 249 million.
Judging by the recent successes of such giants of social networks, like Facebook (NASDAQ: FB) and Alphabet (NASDAQ: GOOGL), there is every reason to expect from SNAP to another strong report.
On Tuesday, Google's parent company reported on sales growth for the past quarter (including the period of Christmas holidays) due to high digital advertising costs; Youtube revenue jumped by 46%. A little earlier Facebook also reported on a quarterly sales growth by 33%, since the boom of online commerce during the Pandemic period fueled the demand for digital advertising. Snapchat actively competes with Instagram from FB (basically fighting for a young audience).
In October, SNAP guide suggested that the revenue in the fourth quarter can jump at 47-50% y / y (if positive trends in the advertising sector persist). Investors showed great faith in SNAP, so that over the past year, the shares took off 200% and closed on Wednesday at $ 59,20.
Potential further growth
In a recent note, Moffettnathanson analysts stated that the Snap results would pleasantly surprise the market due to very favorable macroeconomic conditions that play growth shares:
"SNAP retains growth potential, earning the splash of e-commerce and growing small and medium-sized marketing budgets, which stimulates the online advertising sector."
"Taking into account the expected cyclic recovery of advertising costs in 2021, according to our estimates, the SNAP revenue next year jums up by 54% and will grow by 30% annually until 2024."
In addition, analysts are impressed with SNAP ability to generate high revenue and at the same time limit the growth of expenditure "relatively modest 20%".
Undoubtedly, improving financial indicators and data on the activity of SNAP users has played a big role in last year's share rally. However, it is worth noting that the attention of the regulatory authorities faced by large social networking companies also plays a SNAP hand.
The application with a clearly defined audience and in small capabilities for violating the rules is in a much better position in the light of potential regulatory changes all over the world than such heavyweights of social networks, like Facebook and Alphabet, for whose crushing some policies.
Summarize
Snap is ready to continue to earn big money against the background of the growing popularity of social networks in a pandemic. This trend should continue to contribute to the attraction of users and extension of sales.
Read Original Articles on: Investing.com