Snap Q4 earnings preview: what to expect from its full year results

Snap may have a positive earnings report despite volatility in leadership.

Snapchat’s parent company Snap is projected to have a positive Q4 revenue report even though there had been a previous stock slump amid changes in leadership. Analysts have said that the social media company will have successful Q4 profits.

Will leadership changes affect Snap’s Q4 earnings?

Snap's Q4 results come after a turbulent year in which its chief executive officer, Tim Stone, departed from Snap. In addition to Stone leaving, other executives were forced out of the social media app company because of inappropriate romantic relationships.

In spite of the leadership turnover, IG analyst, Jeremy Naylor, noted that revenue is expected to grow by about 32% and the corporation is projected to report a loss of $0.19 a share. Nomura Instinet analysts wrote that Snap will focus on redesign, not the corporation’s scandals.

‘Management turnover has garnered all of the recent headlines for Snap, but we’re not expecting much commentary around the recent departures. We do expect the company to focus on the Android redesign, which in our view is one of the most important issues the company faces, and we anticipate there will be plenty of commentary about the newer ad formats such as Pixel,’ wrote the analysts.

How do Instagram and Facebook Stories affect Snap’s Q4 earnings?

Facebook’s Q4 earnings show that its ownership of the popular apps Instagram and Facebook Stories have cut into Snapchat’s dominance in short videos and picture filters. Nomura Instinet believes that Facebook’s positive earnings report could reduce Snap’s customer base.

‘We think the Facebook results from earlier in the week illustrate that advertisers are shifting toward Stories as users spend more time with that format.The main hurdle for Snap is its smaller user base relative to Instagram, though the advertiser tools seem to be in place if the ship starts to right itself.’

Will Snap’s Q4 earnings make it a buy?

Though Snap is facing leadership challenges and competition from Facebook, Michael Pachter, of Wedbush is still bullish on the company.

‘Snap is positioned to drive revenue growth and approach profitability off of its already quite large DAU[daily active users] base when its management demonstrates a desire to do so. The company has taken several steps to improve the utility of its app, increase user engagement, and explain its value proposition to advertisers, and pending evidence to the contrary, we remain confident that Snap will turn the corner sooner rather than later,’ wrote Pachter.

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