Commentary

Analysts Survey Snap's First Earnings Report

Surprising no one, Snap’s first earnings report is eliciting mixed feelings from analysts and company watchers.     

Among other issues, Jessica Liu, senior analyst at Forrester, believes that the “camera company” has yet to prove itself in the key areas of ad tracking and measurement.

“Investing in proving ad effectiveness is encouraging but talk is cheap,” Liu said. “Marketers are demanding that all digital marketing channels be held more accountable for everything from ad fraud to ad delivery transparency to better measurement.”

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“Snapchat is not an exception to this rule and most social marketers already complain about Snapchat's lack of user data and proper social measurement,” Liu added. “It’s one thing to say on the earnings call that they intend to do a better job of delivering metrics to prove ad effectiveness, but they have to execute.”

Among other analysts, Pivotal’s Brian Wieser doesn’t love the fact that Snap is already blaming “seasonality” for revenue softness.

“As seasonality is commonly associated with more mature companies,” Wieser explained in a note, “the revenue figure will cause some investors to be understandably concerned, and suggests that our expectations for revenue growth over the remainder of this year and beyond might be too aggressive.”

As such, Wieser said Pivotal Research was reducing its full year revenue expectations for Snap to $872 million -- down from $963 million.

On a more positive note, Heath Terry at Goldman Sachs said that, “While [Snap] remains a near venture stage investment with all of the risks that implies, we continue to believe its audience and engagement represent a unique asset that will benefit from growth and diversification of internet usage and advertiser adoption as both mature.”

Likewise, Ross Sandler at Barclays said in a client note“We still like the long-term backdrop for Snap’s innovation and overall potential.”

Yet, citing specifics in Snap’s report, Sandler said the company’s performance is “not strong enough to disprove the ‘Facebook Is crushing Snapchat’ thesis, which we think persists for a while.”

This column was previously published in Moblog on May 11, 2017.

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