One of the biggest stories of last week was how Snap Inc. (NYSE:SNAP) shares plunged 30% in the week since its latest quarterly results, closing yesterday at US$9.36. The results look positive overall; while revenues of US$1.2b were in line with analyst predictions, statutory losses were 4.9% smaller than expected, with Snap losing US$0.15 per share. This is an important time for investors, as they can track a company’s performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
View our latest analysis for Snap
Taking into account the latest results, the current consensus from Snap’s 37 analysts is for revenues of US$5.36b in 2024. This would reflect a satisfactory 7.7% increase on its revenue over the past 12 months. Losses are predicted to fall substantially, shrinking 26% to US$0.53. Before this latest report, the consensus had been expecting revenues of US$5.38b and US$0.51 per share in losses. So it’s pretty clear consensus is mixed on Snap after the new consensus numbers; while the analysts held their revenue numbers steady, they also administered a pronounced increase to per-share loss expectations.
With the increase in forecast losses for next year, it’s perhaps no surprise to see that the average price target dipped 5.7% to US$14.55, with the analysts signalling that growing losses would be a definite concern. The consensus price target is just an average of individual analyst targets, so – it could be handy to see how wide the range of underlying estimates is. The most optimistic Snap analyst has a price target of US$20.00 per share, while the most pessimistic values it at US$10.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It’s pretty clear that there is an expectation that Snap’s revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 16% growth on an annualised basis. This is compared to a historical growth rate of 23% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 10% per year. So it’s pretty clear that, while Snap’s revenue growth is expected to slow, it’s still expected to grow faster than the industry itself.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Snap. Fortunately, they also reconfirmed their revenue numbers, suggesting that it’s tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Snap’s future valuation.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Snap going out to 2026, and you can see them free on our platform here..
It is also worth noting that we have found 2 warning signs for Snap that you need to take into consideration.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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