12/4/2023 0 Comments Tik tok stock forecast![]() ![]() Source: Q1 Earnings Presentation The Bear Case for SNAP Basically, advertisers are throwing more money at the platform against a flat number of users. Snap instead likes to point out that the average revenue per user (ARPU) is surging, up 39% globally in Q1 at $1.68. Snap DAU numbers are in contrast to other social media juggernauts including Facebook (NASDAQ: FB) and Twitter (NASDAQ: TWTR) which each reported growth of 7.7% and 11.6% for the metric each respectively. These numbers were actually better than expected considering the user loses that were observed in 2018. North America saw a decline of 1% while Europe was down 2%. In terms of user data, reported daily average users (DAUs) was slightly down year over year at 190 million compared to 191 million in Q1 last year. Management offered Q2 revenue guidance to be between $335 million and $360 million, or growth between 28% and 37% y/y. The story has been a narrowing loss with improving cash flow. Still reported free cash flow remained a negative at $78 million on the quarter compared to larger negative of $268 million for the period last year. ![]() Quarterly revenues grew 39% year over year while the company did a commendable job of holding operating expenses down which actually declined 4% y/y. SNAP released its Q1 earnings April 23rd posting Non-GAAP EPS of -$0.10, beating by $0.02 and Revenue of $320.4 million ahead of expectations by $14.2 million. Unconvincing long term strategy goals (a camera company?).Valuation (not expected to be profitable through 2021/ maybe never).No user growth (could fall and under-perform expectations going forward).Chinese rival 'Tik-Tok' is a threat to brand momentum.The following points highlight my bearish views on shares of SNAP: This article covers my bearish view on SNAP including information on why Tik-Tok is now seen as disruptive. I'm bearish on SNAP given significant long term uncertainties. While it remains to be seen what impact Tik-Tok will have on Snap's long term growth, it highlights what I view to be the relative fragility of Snap's core business among fast changing youth fads and tech platform popularity. ![]() Apparently 'Tik-Tok' has become something of a global phenomenon gaining traction in recent months among teenagers and reports suggest its already drawing users away from the Snapchat platform. Despite the recent optimism, investors should take note of emerging Chinese rival application 'Tik-Tok' which has a similar concept of short videos and targets the same user demographic. The company has yet to make a profit but is narrowing its loss while revenues continue to grow. The recovery has been based on better than expected 2018 fiscal Q4 results released in January along with a positive outlook in its latest Q1 report. The stock is now up 110% YTD and 140% since reaching a low $4.82 in December. (NASDAQ: NYSE: SNAP) has staged an impressive turnaround in 2019. ![]()
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