This Analyst's Survey Data Doesn't Bode Well For Snapchat

Cowen's monthly recurring survey of 2,500 U.S. consumers aged 18 and up reveals some negative trends that could negatively impact Snap Inc SNAP.

The Analyst

Cowen's John Blackledge maintains an Underperform rating on Snap with a price target lowered from $10 to $9.

The Thesis

Cowen's survey of adult aged Snapchat users found that users are spending on average 33 minutes per day on the platform in the second quarter (through May), Blackledge said in a research note. This implies a decline of 7 percent on a year-over-year basis. On a year-to-date basis (through May), Snapchat users also spent 33 minutes on the platform on average, which is flattish over the same five-month period a year ago.

The analyst felt it prudent to lower Snap's second-quarter estimates as follows:

• Total revenue lowered from $262 million to $248 million;
• Advertising revenue growth lowered from 47 percent to $39 percent year-over-year;
• Daily active users lowered from 196 million to 194 million; and
• EBITDA loss lowered from $198 million to negative $230 million.

For the full fiscal year 2018, the following changes were made to the analyst's model:

• Total revenue lowered from $1.22 billion to $1.16 billion.
• EBITDA loss of $750 million versus the consensus estimate of negative $720 million.
• DAUs lowered from 211 million to 205 million.

Price Action

Shares of Snap were trading lower by more than 8 percent Tuesday at $12.91.

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