Snap Down 20% YTD Ahead of Q2 Earnings Report
Snap Down 20% YTD Ahead of Q2 Earnings Report
Users and ad revenue in focus amid volatile trading: What active investors should know
Snap is scheduled to announce second-quarter earnings Thursday, Aug. 1, after the market close.
Analysts expect the comapany to post earnings per share of $0.02 on revenue of $1.15 billion.
Snap’s expected move on earnings is +/- 2.43 points, or 18.3% of today’s stock price.
Snap (SNAP) is slated to report second-quarter earnings after the market closes Thursday, Aug. 1. A conference call with management will follow shortly after earnings at 5:30 p.m. EDT.
Snap hasn’t had a great year, with the stock price down about 20% since the start of 2024 despite surging nearly 30% after reporting impressive first-quarter results in late April. Last quarter’s results unveiled a surprise pickup in revenue growth driven by a bounce-back in the digital ads market.
A broader market pullback that sent volatility surging hasn’t helped the technology stock.
What do investors expect from Snap?
According to Yahoo Finance, analysts expect Snap to post earnings per share (EPS) of $0.02 on $1.15 billion in revenue. That would be up from a loss of $0.02 per share last year on $1.05 billion. Guidance from Snap in Q1 put the company’s revenue target of $1.22 to $1.25 billion and adjusted EBITDA (earnings before income tax, depreciation and amortization) of $15 to $45 million for Q2.
Several key metrics are on investors’ minds going into Q2 earnings. Daily average users (DAUs) grew 10% from a year ago last quarter, and investors will want to see that growth continue, as it makes up the platform’s primary base of interactions. Snap guided for 431 million DAUs for Q2.
Snapchat+, Snap’s premium user experience, rose above 9 million subscribers in Q1. That represented a tripling of subs from a year ago. Snap onboarded more than 1,500 “Snap Stars” last quarter, bolstering growth in Story posts. Investors will want to see these numbers at least keep pace with previous growth.
Trading SNAP earnings
Snap traded with an implied volatility rank (IVR) of 77.0 today. That means implied volatility (IV) is elevated compared to the last year.
The options market is pricing an implied move of +/- 2.43 points for the Aug. 2 expiration, which represents 18.3% of today’s 13.29 stock price. That is a rather large move for earnings compared to the broader market’s range of 5%-10%.
Snap has seen large moves on earnings, and the stock price is closer to its 2024 low at 10.08, traded back in April before its first quarter earnings result sent the stock higher.
A disappointing result could push Snap beyond its expected move and toward that April low, which would threaten further downside if breached. Alternatively, bulls have more work to do on the upside.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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