Snap (SNAP) stock jumped 10.6% in after-hours trading yesterday after Q3 FY24 results exceeded estimates. Adjusted earnings per share (EPS) of $0.08 rose 300% year-over-year and surpassed the consensus of $0.08. Additionally, revenue grew 15% year-over-year to $1.37 billion and exceeded analysts’ consensus estimate of $1.36 billion.
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Snap’s Results Improve on Strategic Measures
Importantly, Snapchat’s daily active users (DAU) rose 9% year-over-year to 443 million, beating analysts’ projection of 441 million. Also, the total time spent on the platform jumped 25% compared to Q3 FY23. What’s more, the social media company introduced a new $500 million share buyback program to enhance shareholder returns. The company is investing heavily in artificial intelligence (AI) and augmented reality (AR) to improve its user experience.
CEO Evan Spiegel has been enhancing the company’s advertising business by focusing more on targeted advertising and direct response ads. Moreover, Snap has revamped its app, launched new AI-powered features for greater user engagement, improved algorithms for ranking posts, and launched a subscription product called Snapchat+ that has garnered meaningful users.
Snap Guides Modestly for Holiday Quarter
Snap expects Q4 sales in the range of $1.51 billion to $1.56, reflecting an 11% to 15% growth compared to the prior-year period. The company noted that revenue growth was not as robust as expected since it has not yet reached an adequate pace in advertising from large enterprise clients. Furthermore, Q4 DAUs are projected to reach 451 million.
Snap’s Website Visits Hinted at Sales Beat
Considering the growing traffic on Snap’s website and apps, a quarterly sales beat seemed likely. Based on TipRanks’ Website Traffic tool, the total estimated visits to all of Snap’s websites and apps jumped 49.32% in the year-to-date period compared to the prior year.
A study of a company’s website traffic trends can disclose meaningful information about a particular period’s performance and help gauge the stock price movement.
Is SNAP a Buy, Hold, or Sell?
Analysts remain cautious about Snap’s turnaround efforts and prefer remaining on the sidelines for now. On TipRanks, SNAP stock has a Hold consensus rating based on seven Buys, 21 Holds, and one Sell rating. The average Snap stock price target of $12.88 implies 18.3% upside potential from current levels. Year-to-date, SNAP shares have lost 35.7%.
All these ratings were given before Snap reported its Q3 results and could change after analysts revisit their views on the stock.
