Snap is rallying ahead of earnings (SNAP)

pulse

February 6, 2018 6:21 PM

Snap reports earnings after Tuesday's closing bell, and is widely expected to post another loss.

Snap reports after Tuesday's closing bell.
Wall Street expects another quarter of losses.
The most bearish analyst thinks Snap should be trading at $6 a share while the most bullish say it should be at $18.

Snap shares are spiking, up 1.44% at $14.05 apiece, ahead of the company's fourth-quarter earnings which are due out after Tuesday's closing bell.

But earnings expectations aren't so optimistic. Wall Street expects the social media company to lose $0.32 a share on revenue of $252.82 million. On an adjusted basis, analysts are expecting a loss of $0.16 s share.

Snap has seen a pick up in user growth of late, with a daily active user growth rate of 17% year-over-year in the third-quarter, better than Facebook's 14% year-over-year DAU growth rate in the fourth-quarter. But Evercore ISI analyst Anthony DiClemente gives Snap a price target of $7, citing poor ability to monetize those users. Analyst Michael Nathanson of Moffet Nathanson is even more bearish, giving the photo-sharing company a price target of $6.

But bullish Goldman Sachs analyst Heath Terry is not dissuaded by Snap's monetization issues, and has a price target of $18. "While monetization growth has been slower than we previously expected, we continue to believe its audience and engagement represent a unique asset," Terry wrote in a recent research report.

Meanwhile, Snap's move to create more programmatic ads "has exceeded management expectations," he said. And although CPM's (cost per impression) decreased 60% year-over-year in the third-quarter, hence Snap's monetization problem, Terry still believes in Snap's "high value audience" and "rich media inventory."

Wall Street has a consensus price target of $12.27 with 11 analysts rating the stock a sell, compared with five who rate it a buy.

Snap shares are down about 3.4% this year.

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