"Snaps Back': Snap (SNAP) Stock Explodes 50% After First Profitable Quarter, Analyst Says Recovery 'Better Than Feared'
Snap (NYSE: SNAP) reported better-than-expected Q4 2021 earnings, revenue and user growth numbers, as well as its first quarterly net profit. As a result, Snap stock price is up around 49% in premarket trading Friday.
The social media company reported an adjusted EPS of 22 cents, compared to analyst consensus of 10 cents, according to Refinitiv. Revenue stood at $1.3 billion, slightly above the $1.2 billion consensus.
The number of reported Global Daily Active Daily Users (DAUs) was 319 million for the quarter, topping the consensus estimates of 316.9 million, according to StreetAccount. Average Revenue per User (ARPU) amounted to $4.06, versus the expected $3.79 consensus.
Going forward, Snap said it expected Q1 2022 revenue between $1.03 billion and $1.08 billion, compared to the analyst consensus of $1.01 billion. The company anticipates the number of DAUs to land between 328 million and 330 million in Q1, also more than the analyst consensus of 327.8 million.
"We achieved adjusted EBITDA profitability for the second consecutive year; we recorded our first full year of positive free cash flow; and Q4 marked our first quarter of positive net income," said Snap CEO Evan Spiegel.
Stifel analyst Mark Kelley raised the price target to $50.00 per share from the prior $45.00 following a solid beat. Kelley also reiterated a Top Large Cap Pick designation on SNAP.
“This print and guide does leave a lot of questions, however, between the strength and tone of the SNAP call (and PINS as well) relative to what we heard from Meta the previous night. At this point, we chalk it up to Facebook's SMB-heavy platform vs. peers, though SNAP management seemed to suggest SMBs should be able to navigate these waters just as well,” Kelley wrote in a client note.
Raymond James analyst Aaron Kessler has maintained a Market Perform rating on SNAP due to valuation.
“We are encouraged by Snap’s strong revenue performance and ability to navigate iOS headwinds. While incrementally positive, we maintain our Market Perform rating as we view risk/reward as fairly balanced at current levels of ~12x/19x our 2022 revenue/gross profit estimates based on after hours price,” Kessler said.
Snap stock price closed 23.5% lower heading into the print.
By Senad Karaahmetovic | [email protected]