Snap (SNAP) Looks a Lot Like Twitter in the Early Going, but Results 'Not Thesis-Changing.. Way Too Early' - RBC
RBC Capital analyst Mark Mahaney weighed in on Snap Inc (NYSE: SNAP) following its first quarter as a public company and colcludes the company looks a lot like Twitter so far. "TWTR shares collapsed 24% on its first EPS print... So too did SNAP," he mentions. However, he strongly argues against Q1 results being thesis-changing, sayig it is "way to early."
Mahaney admits "Yes, SNAP will be the “Beta King” for some time," but adds "[b]ut that doesn’t obviate the reality that Snap has become an innovation leader – for both consumers & advertisers – in the single fastest advertising medium today – Mobile."
He believes if SNAP can sustains its current level of innovation, it can sustain premium growth for a long time and scale to profitability.
On the Twitter analogy, he comments, "We shall see, but we’d point out that SNAP is already larger in terms of DAUs (166MM vs. ~ 150MM), is growing dramatically faster (both Revenue and DAUs), is materially less monetized (~1/4th the ARPU), has recently demonstrated much greater innovation (subjective POV), and has a broader value proposition (subjective POV)."
The firm's '17 Revenue unchanged at $1.12B, tho ’17 Adjusted EBITDA loss lowered 7% to $746MM due to heavier Q1 COGS.
The analsyt maintains an Outperform rating and price target of $31.
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Shares of Snap Inc closed at $22.98 yesterday.