5 Snap Analysts Break Down Q1 Earnings: What's The Read-Through For Advertising?

Social media platform Snapchat parent company Snap Inc SNAP reported quarterly earnings Thursday after the market close.

Shares were extremely, volatile going from red to green sharply in the after-hours trading session.

So where do analysts stand with the company after the latest report?

The Snap Analysts: Morgan Stanley analyst Brian Nowak has an Overweight rating on Snap and lowered the price target from $59 to $50.

Bank of America analyst Justin Post has a Buy rating and a $50 price target.

KeyBanc analyst Justin Patterson has an Overweight rating and a $45 price target.

Rosenblatt analyst Barton Crockett has a Buy rating and a $49 price target.

Raymond James analyst Aaron Kessler has a Market Perform rating and no price target.

Related Link: How Snapchat Parent Snap Looks Heading Into Q1 Earnings 

The SnapTakeaways: Nowak, the only one of the five Snap analysts to lower a price target, said the cautious guidance from Snap shows some uncertainty for the advertising market.

“While SNAP is executing at a high level from a micro perspective on ads and engagement, SNAP is seeing macro uncertainty (supply chain, labor shortages, inflation, war in Ukraine, economic concerns) weigh on near-term ad growth,” the analyst said.

Post sees the company having an acceleration in the second half of the fiscal year.

“Outlook on macro environment suggests Snap and sector could see future disruptions, but we think Snap is well positioned to accelerate in 2H,” Post said.

Patterson also said the second half for Snap will improve and points to macro headwinds being less severe than expected.

“Comps ease in 2H and there are still multiple levers to get SNAP back to >40% y/y growth in 2023E and beyond,” Patterson said.

The analyst also highlighted strong upfront advertising spend by partners with Snap.

One area that impacted Snap, like other competitors, was the Ukraine invasion. Kessler points to many advertisers that paused campaigns during the initial invasion, a 10-day period.

“Revenue growth exceeded expectations prior to the Ukraine invasion with growth of 44%,” Kessler said.

One area of strength from the earnings report for Crockett was EBITDA. Snap beat its quarterly adjusted EBITDA guidance and has now beaten the total in 11 of the last 12 quarters.

“The Snap thesis remains. User trends are comparatively constructive at Snap, positioning it relatively strongly to be a leader in secularly-boosted internet ad growth,” Crockett said.

SNAP Price Action: Snap shares were down 0.61% Friday afternoon. Shares have traded between $24.32 and $83.34 over the last 52 weeks.