Snap shares hit all-time low as analysts slash targets on poor 1Q results

Wall Street analysts are recasting their projections and slashing their stock price targets on Snap Inc (NYSE:SNAP) a day after the Snapchat app maker posted dismal first-quarter results.

Brent Thill, a Jefferies analyst, lowered his price target on the stock to US$14 from US$17 after Snap posted the lowest top line growth it has seen as a public company and reported user metrics which “show more trouble ahead”. Thill, who maintains a Hold rating on Snap shares, continues to recommend Facebook Inc (NASDAQ:FB) stock as an alternative in the social media arena and is also more positive on Twitter Inc (NYSE:TWTR).

The shares fell to more than 20% and hit an all-time low of US$10.96 in morning trading. 

READ: Snap shares plunge as 1Q earnings miss estimates

Analysts from Wedbush, meanwhile, have opted to slash their price target on the stock even further to US$10 from US$12.50. They attributed the shortfall in the group’s revenues – which failed to meet market expectations – to lower than expected growth in Snapchat’s daily active users and concerns from advertisers about Snapchat’s controversial redesign, rolled out in January.

The witheringly poor first-quarter results throw shade on Snap’s recent efforts to redesign its Snapchat app, which have not been lauded by some of its longtime users.

The future looks not so rosy as well as Snap’s year-over-year revenue growth is set to slow in the second quarter, said Drew Vollero, the group’s chief financial officer, due partly to a fall in advertising rates.

The group reported that its total revenue for the quarter of US$230.7mln missed analysts’ expectations of US$244.5mln.

In the first quarter, Snap reported a loss of $0.17 cents per share, which was slightly more than the $0.16 cents per share expected by Wall Street. Its net loss, meanwhile, came to US$385.8mln compared with US$2.21bn in the year-ago quarter.

Its daily active users – a key metric for advertisers – also fell short of projections, coming in at 191mln versus the 194.2mln which had been expected.

Snap has remodeled its app and tacked on ad buying tools as it looks to compete with its rival Facebook which has unveiled some new features reminiscent of Snapchat’s on Instagram.

–Updates headline and share price

Story by ProactiveInvestors