Snap (NYSE:SNAP) Q3 2020 Earnings Prep

in EARNINGS/INVESTING IDEAS by

Snap Inc. (NYSE:SNAP) is scheduled to report Q3 earnings results on October 20, 2020.

The company is expected to report earnings of -$0.05/share on revenue of $551.4 million. The consensus earnings per share (EPS) of -$0.05/share is based on a poll of 27 analysts and represents a growth in eps of 26.8% over the same quarter last year, when the company reported earnings of -$0.04/share.

The revenue forecast of $551.4 million based on a poll of 32 analysts implies a year-over-year (YoY) growth in revenue of 23.6%. Last year the company reported $446.2 million in revenue for the quarter.

Expected to report EPS of -$0.05/share for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $551.36 $446.20 23.6%
EPS -$0.05 -$0.04 26.8%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, missed 1 quarters, and met expectations 1 quarters.

What are your expectations from Snap Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.10 -$0.09 −6.0% Missed
Q1, 2020 -$0.08 -$0.08 2.9% Beat
Q4, 2019 $0.01 $0.03 363.7% Beat
Q3, 2019 -$0.05 -$0.04 −26.2% Missed
Q2, 2019 -$0.10 -$0.06 −37.4% Missed
Q1, 2019 -$0.12 -$0.10 −17.0% Missed
Q4, 2018 -$0.08 -$0.04 −48.0% Missed
Q3, 2018 -$0.14 -$0.12 −14.0% Missed

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −8.2%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 21, 2020 $25.27 $23.20 −8.2% Decline
April 21, 2020 $12.92 $17.01 31.7% Increase
February 4, 2020 $18.23 $16.19 −11.2% Decline
October 22, 2019 $14.58 $13.18 −9.6% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.66, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.66 implies a 0.0% chance of earnings manipulation.

Fundamentals And Technical Analysis

Snap Inc. is currently trading at its 52-week high of $28.72/share, up 3.2% for the day. The company’s stock price is up 23.8% since the last earnings report and up 6.5% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 70.76 suggests the company is trading in technically overbought territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:SNAP Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −38.36 and a forward P/E multiple of −145.75.

Snap Inc.’s current share price also implies a price-to-book (P/B) multiple of 19.23. The following table summarizes some other key fundamental ratios:

Data as of October 19, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $28.72
P/E Ratio −38.4x
P/E Ratio (Fwd) −145.8x
PEG Ratio −8.5
Total Debt / Total Capital 4.5%
Levered Free Cash Flow -$247 million
EV / EBITDA −46.1x

Finbox

Snap Inc. is a large-cap stock with a market capitalization of $40.888 billion and a total enterprise value of $40.005 billion. The company operates in the Communication Services sector and the Interactive Media & Services industry.

Snap Inc. operates as a camera company in the United States and internationally. The company offers Snapchat, a camera application that helps people to communicate through short videos and images called Snaps. It also provides Camera, a tool to personalize and add context to Snaps; Chat that allows creating and watching stories, chatting with groups, making voice and video calls, and communicating through a range of contextual stickers and Bitmojis; and Discover that helps surfacing the stories and shows from publishers, creators, and the community based on a user’s subscriptions and interests. In addition, the company offers Snap Map, which brings to a live map of individual location, showing nearby friends, popular stories, and a heatmap of recent snaps posted; Memories that allows users to choose to save the Snaps they create in a searchable personal collection, and users to create Snaps and stories from their saved Snaps and camera roll; and Spectacles, a hardware product that connects with Snapchat and captures video from a human perspective. The company was formerly known as Snapchat, Inc. and changed its name to Snap Inc. in September 2016. Snap Inc. was founded in 2010 and is headquartered in Santa Monica, California.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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