What to Expect When Snap Inc. (SNAP) Reports Quarterly Earnings?

Snapchat, a social media platform owned by Snap Inc. (NYSE: SNAP), will release its first-quarter report on Thursday, April 21. Investors are optimistic that the firm will continue to grow its subscriber base.

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According to Wall Street experts, Snap’s sales would increase by more than 40% to $1.07 billion, with earnings per share reaching $0.01. That is, the firm will have another break-even quarter. However, the dynamics of adding new users, particularly in North America, will be a far more crucial signal for investors.

Snapchat has 319 million users globally as of December 31, 2021, up 20% year over year and 13 million higher than the previous quarter. Over the last five quarters, Snapchat’s user base has grown steadily. Snap’s ability to attract new consumers even when the economy recovers is a positive sign: people are finding ways to utilize the social network even when they have access to other forms of entertainment.

Because its services are free to use, Snap’s major source of revenue is advertising. Simultaneously, marketers are especially interested in the increase in the number of users from North America, as this is where consumers with a lot of money dwell. North America has a far higher average revenue per user (ARPU) than any other region: $9.58 in North America, $2.54 in Europe, and $1.12 in the rest of the globe.

The overall income of Snap is increasing as the number of users grows and the average revenue per user rises. Revenue grew 42 percent year over year to $1.2 billion in the fourth quarter. Snap’s first successful quarter, with a net income of $23 million, was a watershed moment in the company’s history.

Snap’s management, however, has identified certain potential concerns on the eve of the Q1 release. These include unpredictable advertising demand owing to supply chain constraints, greater competition, and roadblocks posed by phone manufacturers’ improved privacy measures.

Shares of Snap Inc. (SNAP) have dropped -8.49 percent in the last week, but have been down -14.20 percent in the previous quarter. Going back further, the stock’s price has been down -57.80% in the previous six months but is down -30.60 percent year-to-date.