Last Wednesday, Snap Inc. stock fell by 20%. This is after the company released its first financial results following its widely published initial public offering.
Snap Inc. reported $149 million in revenues, which missed the expectation of analysts.
So, how are the big investors reacting to such news? Well, it depends on who you are asking. And here’s what they say
Morgan Stanley
Recommendation: Buy
According to Morgan Stanley, there is no denying that Snap Inc. reported disappointing last quarter financial results. Most investors were not expecting such kind of numbers. Nevertheless, Morgan Stanley is looking at a bigger picture. The theory behind why Snap Inc. is a good buy still hasn't changed. In fact, Snap Inc. is showing progress when it comes to the ad product suite, engagement, and user offerings.
Goldman Sachs
Recommendation: Buy
According to Goldman Sachs, there is nothing fundamentally wrong with Snap Inc.'s numbers, especially when you consider that last quarter results suffered expected seasonal and political-related factors. Goldman Sachs recognizes that Snap Inc. is barely out of its venture phase, and that comes with a risk. However, Goldman Sachs continues to believe that the company's engagement and audience have their own niche. They are an asset that is hard for the competition to take over. The growth and diversification strategy of the company is sound. Thus, Goldman Sachs considers Snap Inc. a good buy.
Barclay
Recommendation: Hold
Barclay is not recommending a sell or a buy for several reasons. While the first quarter revenue may have exceeded Barclay's estimate, it still not strong enough to be considered as a buy. Snap Inc.'s performance is a clear sign that the "Facebook is crushing Snapchat" argument is untrue. While the long-term aspects of Snap Inc. remain strong, the short term is the real problem. Hence, Barclay is recommending a hold and to let the dust settle before making drastic recommendations.
Cowen
Recommendation: Buy
According to Cowen, the only thing that is wrong with Snap Inc.'s financial picture is the decline of the ad revenue. Other metrics are in line. Plus, Snap Inc.’s unique position in the marketplace means that it still has a lot of potential. Thus, Cowen is recommending a buy.
Jefferies
Recommendation: Buy
According to Jefferies, Snap Inc.'s previous quarter results may show a decline, but they are well within the bounds of what is expected of a seasonally down quarter. On the other hand, Snap Inc.'s user engagement continues to grow and users are spending more than 30 minutes per day with the app on average. According to Jefferies, Snap Inc. should be able to continue to increase its revenue once the new advertising platform is released, which includes an advanced targeting information.
Pivotal
Recommendation: Sell
According to Pivotal, the decline in revenues is a big red flag for the company. Furthermore, Pivotal is not convinced that Snap Inc.'s industry is subject to the effects of the seasonal decline. Also, much of the last quarter's earnings are related to partner-sold revenue. Thus, Pivotal recommends a sell as the Snap Inc.'s stock price is overvalued.
