Why BofA Analyst Thinks Snap User Data Is A Mixed Bag

While Snap Inc’s SNAP ad manager data suggests some pressure on users, the data on CPMs (cost per thousand) remains robust and DAU (daily average user) data is trending broadly in line with expectations, according to BofA Securities.

The Snap Analyst: Justin Post maintained a Neutral rating for Snap, with an unchanged price target of $70.

The Snap Thesis: Snap ad manager suggests a 17 million sequential decline in reach in the second quarter to 498 million, Post said in the note.

Downloads in May rose by 18% year-over-year. The analyst pointed out this marks a deceleration from the 46% growth recorded in April and represents a month-over-month decline of 6%.

“US downloads were down 26% y/y (vs down 24% y/y in April), while International downloads were up 23% y/y (vs up 56% in April),” he wrote.

“Worldwide Snap DAUs were up 19% y/y in May (vs +16% in April) and up 3% m/m, much more consistent with Street 2Q estimates,” Post added.

“Snap’s publicly disclosed political ad spend data suggests U.S. spending in 2Q was $0.6mn (through May 29) down from $1.1mn in 1Q. However, average political CPM’s increased to $4.72 from $4.17 in 1Q, and were up 131% y/y from $2.04 in 2Q’20. While political ad spending data is a relatively small sample size, we see y/y increase in CPMs as positive,” he further wrote.

SNAP Price Action: Shares had declined by 1.48% to $62.77 at the time of publication Wednesday.

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