Some signs of DAU stabilisation

Q2 revenue and EBITDA were ahead, but DAUs missed expectations albeit while potentially indicating some stabilisation following the disruption caused by the app redesign earlier in the year. Q3 guidance bracketed consensus and DAUs could return to growth in H2, but with the stock still at a premium to its social media peers we continue to view the risk/reward as unattractive.

App redesign drives declining engagement

Q1 users, revenue and adjusted EBITDA missed as the app redesign drove declining engagement across the quarter and the transition to programmatic pressured the Creative Lenses & Filters ad product. With competitive dynamics intensifying, Snap can ill afford these execution-related issues, and we lower our PT to $9.50 from $14 reflecting the greater uncertainty regarding the company's longer term prospects.

Better qtr, more required to justify valuation

Snap delivered a better Q4, with both user growth and revenue reaccelerating. The company continues to make solid progress in monetising the platform, with the advertiser base widening and losses narrowing as a result. However, with revenue growth guided to decelerate in Q1 and the company still some way from profitability, we still do not view it as being on a trajectory to justify its valuation.

Revenue falls short again

SNAP: Say Cheese! Taking a Cautious View On A "Camera Company". Initia...

​Ah Snap! Considered a social media disruptor by some, Snap (SNAP) considers itself a camera company with the mission to reinvent the camera and how people communicate. Snap standouts in revenue growth, daily users, and the number of 18-24 years olds who use the product, relative to its social media peers. However, there is a minimal barrier to entry for competitors and Facebook has already encroached into its territory by copying Snap’s features for its platform. With a far larger user base...