What's Going On With Snap Stock Monday?

Snap Inc SNAP shares are trading higher by 2.9% to $10.75 during Monday’s session. The company is set to announce its third-quarter financial results during Tuesday’s after-hours session, with Wall Street closely watching the company’s performance after mixed results in the second quarter.

Analysts expect Snap to report earnings of 5 cents per share on revenue of $1.36 billion, which would reflect moderate growth compared to the company's second-quarter results.

What To Know: In the second quarter, Snap reported revenue of $1.24 billion, marking a 16% year-over-year increase but falling slightly short of the consensus estimate of $1.25 billion. Snap's earnings of 2 cents per share came in line with analyst projections.

Snap’s user metrics in the second quarter were encouraging, with daily active users (DAUs) growing 9% year-over-year to reach 432 million, and monthly active users (MAUs) climbing to 850 million. The increase in user engagement, particularly in Snapchat+, has been a bright spot for the company, as it reached over 11 million subscribers.

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However, Snap has continued to face financial challenges, with a negative operating cash flow of $21 million and a free cash flow of negative $73 million in the second quarter, highlighting pressure on profitability amid competitive pressures in the social media space. The company closed second-quarter with a cash position of $1.06 billion, giving it some cushion as it navigates current market dynamics.

What Else: In the company’s second-quarter report, Snap provided a third-quarter outlook suggesting revenue in the range of $1.335 billion to $1.375 billion, implying year-over-year growth of 12% to 16%, slightly lower than its second-quarter growth rate.

The company also guided for an adjusted EBITDA between $70 million and $100 million, showing some optimism about operational improvements. Additionally, Snap’s user growth projections are encouraging, with the company expecting to reach around 441 million DAUs for the third quarter.

Investors will be looking closely at Snap’s monetization efforts and cost management strategies. CEO Evan Spiegel highlighted Snap’s advertising platform expansion in the second quarter, with active advertisers more than doubling year-over-year, positioning Snap to benefit from the ongoing digital advertising rebound.

The Snap Partner Summit, held in September, was an opportunity for the company to showcase its upcoming innovations, which may provide clues about new product features or monetization opportunities for the third quarter and beyond.

Snap’s ability to balance user growth with operational efficiency will be under scrutiny, particularly as it competes with other social media platforms in an environment marked by economic uncertainty and digital advertising volatility.

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Is SNAP A Good Stock To Buy?

When deciding whether to buy a stock, there are some key fundamentals investors may want to consider. One of these factors is revenue growth. Buying a stock is essentially a bet that the business will continue to grow and generate profits in the future.

Snap has reported average annual revenue growth of 42.97% over the past 5 years. .

It's also important to pay attention to valuation when deciding whether to buy a stock. Snap has a forward P/E ratio of 35.97. This means investors are paying $35.97 for each dollar of expected earnings in the future. The average forward P/E ratio of Snap's peers is 60.49.

Other important metrics to look at include a company's profitability, balance sheet, performance relative to a benchmark index and valuation compared to peers. For in-depth analysis tools and important financial data, check out Benzinga PRO.

According to data from Benzinga Pro, SNAP has a 52-week high of $17.90 and a 52-week low of $8.29.