Snap’s Great Q4 Overshadowed By Mixed Guidance

Snapchat developer Snap Inc. had a good holiday quarter, besting analyst expectations for revenue and user growth. But, unable to step out from under the looming specter of an upcoming iPhone change, the company warned of a first-quarter loss, sending shares down 8 percent — and falling — in after-hours trading.

For the fourth quarter of 2020, revenue soared 62 percent to $911.3 million, handily beating the $856.1 million expected and far exceeding the $560.9 million from the year-ago quarter. Adjusted earnings per share landed at 9 cents, topping the 7 cents anticipated and shooting well over the 3 cents from the holiday 2019 period.

The Snapchat platform reported 265 million daily active users, exceeding predictions of 257.9 million.

All of that should have been good news, particularly after a tumultuous year for advertising sales, Snap’s main revenue driver. Like Google, Facebook and other ad sales-dependent tech platforms, however, Snapchat saw momentum return after initial upheaval caused by the coronavirus pandemic — particularly as homebound consumers stormed the internet to stay connected with friends, shop or otherwise entertain themselves.

But as a mobile-first platform, the social media company is also uniquely vulnerable when big changes come to major smartphone platforms, like Apple’s iOS. The iPhone maker will soon require explicit permission for user tracking, in a move destined to disrupt ad targeting.

According to data released in January from MKM Partners, an institutional equity research, sales and trading firm, Apple’s update is likely to make the deepest impact on Facebook and Snapchat.

The Instagram parent company — which now sees Apple as its latest, greatest threat — is already preparing for the change. The social media giant hopes to convince iOS users to opt in to the tracking via a new prompt packed into its mobile app.

Snap could follow suit at some point. But in the meantime, it has issued a mixed bag of guidance for the current quarter. On one hand, the company forecast revenue between $720 million and $740 million, setting its sights above the $705 million expected. But on the other, it sees a loss in adjusted earnings of $50 million to $70 million. Analysts sought a profit of at least $17.5 million.

Source: Read Full Article