- Snap, Snapchat's parent company, is set to report fourth-quarter and full-year earnings after Tuesday's closing bell.
- Shares were trading slightly lower ahead of the report.
- Even though Snap has bounced strongly off its all-time low last December, it's still trading about 70% below its initial public offering price of $17 per share.
- Ahead of the report, analysts weighed in on what to expect after the company's most recent executive departure.
- Watch Snap trade live.
Snap, the parent company of the messaging app Snapchat, is scheduled to report fourth-quarter and full-year earnings after Tuesday's closing bell.
Wall Street analysts were cautious ahead of results — which Snap said in a preannouncement would prove "slightly favorable to the top end" of its prior guidance. The report will be the last for departing chief financial officer Tim Stone. The sudden announcement sent the stock tumbling and left analysts concerned about management's execution.
Snap shares were slightly lower Tuesday, with some experts who track the name from a technical standpoint saying the stock has traded in anything but a resilient fashion.
"It's been a very weak stock that has bounced over 45% off its lows and is now back to its declining 100-dma,"Robert Sluymer, technical strategist and managing director at Fundstrat Global Advisors, told Business Insider in an email on Tuesday. A declining 100-day moving average is traditionally a negative indicator.
Even though Snap has bounced sharply off its December 2018 record low of $4.82 per share (currently $6.91), the stock is still trading nearly 70% below its initial public offering price of $17.
Meanwhile, even relatively bullish analysts said that key risks loom over the stock at this point. Mark Mahaney, an analyst at RBC Capital Markets who downgraded shares in the wake of Snap's announcement of Stone's departure last month, said there's potential for "further deceleration" in the app's user growth. He carries an $8 price target, implying a 15% rise from current levels.
He added: "A KEY will be whether SNAP guides to DAU stabilization. An unknown."
Snap shares have consistently reacted to earnings reports with wide swings. This quarter is no different, with an implied move of 15% in either direction, according to an analysis from derivatives strategists at Susquehanna. On average, the stock has seen a 19.5% realized move over the company's seven reports.
With Snap trading at a relatively inexpensive valuation of 5.3 times enterprise-value-to-revenue — one way to assess a security's valuation — the stock appears fairly valued, SunTrust analysts told clients in a note on Monday. Still, the analysts recommend investors hold the stock, rather than buy it up, in part because of decelerating revenue and "high leadership turnover."
Read more: Here are 20 senior executives who have abandoned Snap since its IPO less than 2 years ago
Wall Street analysts surveyed by Bloomberg expect Snap to report an adjusted loss of $0.08 per share on revenue of $377.48 million. Twenty-four analysts surveyed by Bloomberg carry "hold" ratings, 10 say "sell," and four say "buy."
Last quarter, the company reported both profits and sales that topped analysts' forecasts, with an adjusted loss of $0.12 per share on revenue of $297.7 million.
Now read:
- Snap is losing its CFO after less than a year, and the stock is plummeting
- Snap gets hit with a downgrade as analyst says it may need to give out more stock to keep key employee
- Snapchat is thinking of making some snaps permanent in an attempt to boost revenue
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