Entering text into the input field will update the search result below

Snap Was A One-Quarter Wonder

May 02, 2018 1:27 AM ETSnap Inc. (SNAP)69 Comments
Bill Maurer profile picture
Bill Maurer


  • Company badly misses revenue estimates.
  • Adjusted EBITDA and free cash flow worsen.
  • User base not really growing.

After the bell on Tuesday, shares of camera company Snap (NYSE:SNAP) plunged more than $2 a share, putting their all-time lows in play, after the company reported its first quarter earnings. For those that thought the name was back in business after the stock soared just a few months ago at the Q4 report, the situation obviously has not gotten any better.

Revenues for the period came in at $230.7 million, missing Street estimates by nearly $13 million. While this did represent 54% growth over the prior year period, the Street was expecting much more after Q4's large beat. Part of the miss was likely driven by a miss on daily active user growth. Snap reported DAUs of 191 million, falling short of expectations by about 3 million. This represents just 2% growth sequentially.

Unfortunately, the revenue miss wasn't even the worst part of the report. The company reported an adjusted EBITDA loss of $218 million, which was an increase of 16% over the prior year period, and the worst quarterly reported number since the name went public. It's also down considerably from the $158 million loss reported in Q4, as seen in the chart below.

(Source: Snap earnings slides)

One of my biggest concerns with Snap has been the company's cash situation. Part of the reason for going public was that high cash burn required a capital infusion, and we're likely to see another raise coming in the next year or two. For Q1 2018, the company reported negative free cash flow of $268 million, nearly $100 million worse than the prior year period. This was also the worst free cash flow quarter since going public by nearly $40 million. While the company still had over $1.8 billion in cash at quarter's end, it cannot continue to burn through money like this indefinitely.

This article was written by

Bill Maurer profile picture
I am a market enthusiast and part-time trader. I started writing for Seeking Alpha in 2011, and it has been a tremendous opportunity and learning experience. I have been interested in the markets since elementary school, and hope to pursue a career in the investment management industry. I have been active in the markets for several years, and am primarily focused on long/short equities. I hold a Bachelor of Science Degree from Lehigh University, where I double majored in Finance and Accounting, with a minor in History. My major track focused on Investments and Financial Analysis. While at Lehigh, I was the Head Portfolio Manager of the Investment Management Group, a student group that manages three portfolios, one long/short and two long only. I have had two internships, one a summer internship at a large bank, and another helping to manage the Lehigh University Endowment for nearly a year. Disclaimer: Bill reminds investors to always do their own due diligence on any investment, and to consult their own financial adviser or representative when necessary. Any material provided is intended as general information only, and should not be considered or relied upon as a formal investment recommendation.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Investors are always reminded that before making any investment, you should do your own proper due diligence on any name directly or indirectly mentioned in this article. Investors should also consider seeking advice from a broker or financial adviser before making any investment decisions. Any material in this article should be considered general information, and not relied on as a formal investment recommendation.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.