Oh, Snap! Sell-Side Sentiment Thuds As Q2 Earnings Disappoint, Stock Plummets

Snap Inc SNAP shared plummeted 11 percent Friday to new all-time lows following a disappointing Q2 earnings report.

A number of Wall Street analysts weighed in on Snap on Friday. Here’s a rundown of what they had to say.

Voices From The Street

UBS analyst Eric Sheridan said another disappointing quarter from Snap leaves even more unanswered questions about how the company will scale its business. “For the 2nd quarter in row, SNAP produced a set of quarterly results that continue to leave unanswered many of the long-term debates on the scope of its platform (users + engagement) and the potential for success in an early stage advertising business (which needs to scale to justify current market valuation),” Sheridan wrote.

Credit Suisse analyst Stephen Ju said Wall Street's earnings estimates are likely now finally in-line with what the company can deliver moving forward. “We believe SNAP shares at current levels are exhibiting asymmetric risk/reward to the upside, with downside risk of ~15% in our Grey Sky scenario and upside potential of ~48% to our target based on where SNAP shares are currently,” Ju wrote.

Barclays analyst Ross Sandler said Snap is clearly making progress in the right direction, but it’s still too early for investors to be buying the stock. “At 8x 2018E revenue in the after-market (~$11.50), we think valuation is starting to look more attractive but want to see upside to estimates before getting more bullish,” Sandler wrote.

Citi analyst Mark May said Snap’s Q2 numbers were better than feared, but average revenue per user was particularly disappointing. “All in, we view the 2Q17 results as good and within expectation, and mgmt’s commentary about the early adoption of its self-service platform is encouraging,” May wrote.

Jefferies analyst Brian Fitzgerald said much of the concerns weighing down the stock are near-term issues only. “Snap's opportunity to be the third largest player in mobile advertising remains intact as advertisers yearn for a third independent player,” Fitzgerald wrote.

Related Link: Analyst: Snap Investors Were Sold Snake Oil

Ratings And Price Targets

While Wall Street remains more bullish than bearish on Snap, some analysts are more bullish than others:

• UBS has a Neutral rating and $12 price target.
• Credit Suisse has an Outperform rating and $17 price target.
• Barclays has an Equal-Weight rating and $13 price target.
• Citi has a Neutral rating and $13 price target.
• Jefferies has a Buy rating and $16 price target.

At time of publication, shares of Snap were down 10.89 percent at $12.27.