‘Slight Miss’ or Sinkhole? Snapchat Parent’s Stock Sinks On Q4 Report


Shares in popular social media app Snapchat‘s parent company tumbled 14.7% on Wednesday following the release of Q4 2019 results Pivotal Research Group Senior Research Analyst for Internet and Media Michael Levine categorizes as “more of a miss” versus expectations rather than anything fundamentally different about the business.

On extremely heavy volume of 108.17 million shares, compared to average volume of 21.35 million shares, Snap Inc. stock dipped $2.80 a share to $16.18.

But, in the grand scheme of things, it may not be all that terrible for Snap. Shares are now where they were heading into Christmas week. One year ago, they were priced at $9.10 per share.

Still, the selloff for a digital darling is startling, as a one-time legal settlement of $100 million resulted in a $49 million-more year-over-year loss.

On a positive note, some 218 million users were logged by Snapchat.

For Pivotal analyst Levine, Snap’s Q4 may be disappointing. But, there is no change to the “underlying story” for investors seeking to buy Snap Inc. shares.

“U.S. ad growth was negatively impacted by the shorter holiday period (consistent with all of its online media peers who have reported) and challenging comps from the rollout of goal-based advertising,” he says.

User growth in Europe rebounded in Q4 and was “strong.”

Further, strong Q1 2020 guidance implies further acceleration for Snap Inc. “We would look to be buyers of the stock,” Levine declares. “Revenues were guided for re-acceleration at the high-end versus Q4 2019 and think that the bull case.”


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