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Snap has been benefiting from a spike in the usage of Snapchat. The growing adoption of Snapchat among the Gen Z (13-24 years) population is expected to have driven Daily Active Users (DAUs), thus expanding the company’s advertiser base.
In the second quarter, Snapchat’s subscriber growth, reflected by DAUs, increased 54 million on a year-over-year basis. DAUs at the end of the second quarter were 347 million, up 18.4% year over year.
The Zacks Consensus Estimate for third-quarter global DAUs is currently pegged at 358 million, indicating growth of 16.4% from the year-ago quarter level.
Moreover, Snapchat+ premium subscription service has gathered initial success, which is expected to have aided top-line growth. On Aug 15, Snap announced that it achieved 1 million subscribers for its Snapchat+ premium subscription since its launch on Jun 29.
SNAP has been focused on continuously adding innovative features like Lens Studio 2.0, Camera Kit, Snap Minis and Bitmoji for games, making Snapchat more attractive for users and advertisers.
In the to-be-reported quarter, Snap announced the launch of a new dual-camera feature for iOS users, wherein they can click photos or record videos using both the front and rear cameras simultaneously.
On Jul 18, Snap announced the launch of Snapchat for Web. Snapchat for Web includes top messaging features like chat reactions and chat replies, along with lenses, which will be rolled out soon.
With these recent launches, Snap has been democratizing its augmented reality (AR) tools that are likely to drive user growth.
In the third quarter, Snap introduced Ghost Phone, a thrilling AR game built using Lens Studio and the web-first game engine, PlayCanvas. The game uses surface recognition and world-scan technology to seamlessly weave AR ghosts into the players’ real-world environment, prompting Snapchatters to collect phantom energy.
In addition to the strong adoption of AR Lenses, the Discover content and Shows are expected to have driven user growth. The growing Snap Originals content is also expected to have bolstered user engagement for this Zacks Rank #2 (Buy) company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In second-quarter 2022, the new Snap Originals, The Fight Inside, reached over 10 million viewers. This new Snap Original features Ryan Garcia and his struggles with mental health and professional boxing.
With more than 150 Snap Originals to date and more than 80% of the U.S. Gen Z population watching a Snap Original last year, the company has renewed two of its hit Snap Originals — Dixie and Charli D’Ameli and The Me and You Show, which garnered more than 20 million and 50 million viewers, respectively.
The Zacks Consensus Estimate for Snap’s third-quarter ARPU is pegged at $3.14, suggesting a decrease of 10% from the year-ago quarter’s reported figure.
A steady ad-spending environment is expected to reflect on Snap’s third-quarter top-line numbers.
Advertising has been the only source of revenues for Snap, which has been facing significant competition from the likes of Twitter , Meta Platforms (META - Free Report) and Alphabet (GOOGL - Free Report) owned Google, for ad dollars. A persistent decline in the price-per-ad impression is likely to have dented advertising revenues for the company.
META is pumping resources into developing AI to address solutions for megatrends like a hybrid work environment, which will drive its user base across various platforms like Meta Portal Go. Investments in AI are also expected to draw higher revenues from Meta’s ad business.
SNAP is also giving competition to META in the metaverse space. It collaborated with Vogue to feature a virtual try-on experience of select pieces from Balenciaga, Dior and Gucci, which will be available for snapchatters globally.
Although Meta Platforms is investing aggressively in building the metaverse, Twitter surpassed it as the first social media giant to enter the non-fungible token marketplace by launching a tool to showcase and sell NFTs on its platform.
In its race to target TV ad dollars, Alphabet allowed third-party (Nielsen and comScore) tagging of YouTube videos to determine the effectiveness of ads on YouTube versus ads shown on TV. The Google Preferred program pulls out the top 5% of the most engaging content on YouTube for advertisers. Alphabet has also promised to advertise this content itself in order to boost traffic. Google Preferred is attracting spending on the platform.
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SNAP Gearing Up to Report Q3 Earnings: What's in the Cards?
Snap (SNAP - Free Report) is set to report third-quarter 2022 results on Oct 20.
The Zacks Consensus Estimate for revenues is currently pegged at $1.13 billion, indicating 5.5% growth from the year-ago quarter’s reported figure.
The consensus mark for the bottom line has been steady at a loss of 1 cent per share, narrower than a loss of 2 cents per share in the past 30 days.
Let’s see how things have shaped up for the upcoming announcement.
Snap Inc. Price and EPS Surprise
Snap Inc. price-eps-surprise | Snap Inc. Quote
Factors to Note
Snap has been benefiting from a spike in the usage of Snapchat. The growing adoption of Snapchat among the Gen Z (13-24 years) population is expected to have driven Daily Active Users (DAUs), thus expanding the company’s advertiser base.
In the second quarter, Snapchat’s subscriber growth, reflected by DAUs, increased 54 million on a year-over-year basis. DAUs at the end of the second quarter were 347 million, up 18.4% year over year.
The Zacks Consensus Estimate for third-quarter global DAUs is currently pegged at 358 million, indicating growth of 16.4% from the year-ago quarter level.
Moreover, Snapchat+ premium subscription service has gathered initial success, which is expected to have aided top-line growth. On Aug 15, Snap announced that it achieved 1 million subscribers for its Snapchat+ premium subscription since its launch on Jun 29.
SNAP has been focused on continuously adding innovative features like Lens Studio 2.0, Camera Kit, Snap Minis and Bitmoji for games, making Snapchat more attractive for users and advertisers.
In the to-be-reported quarter, Snap announced the launch of a new dual-camera feature for iOS users, wherein they can click photos or record videos using both the front and rear cameras simultaneously.
On Jul 18, Snap announced the launch of Snapchat for Web. Snapchat for Web includes top messaging features like chat reactions and chat replies, along with lenses, which will be rolled out soon.
With these recent launches, Snap has been democratizing its augmented reality (AR) tools that are likely to drive user growth.
In the third quarter, Snap introduced Ghost Phone, a thrilling AR game built using Lens Studio and the web-first game engine, PlayCanvas. The game uses surface recognition and world-scan technology to seamlessly weave AR ghosts into the players’ real-world environment, prompting Snapchatters to collect phantom energy.
In addition to the strong adoption of AR Lenses, the Discover content and Shows are expected to have driven user growth. The growing Snap Originals content is also expected to have bolstered user engagement for this Zacks Rank #2 (Buy) company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In second-quarter 2022, the new Snap Originals, The Fight Inside, reached over 10 million viewers. This new Snap Original features Ryan Garcia and his struggles with mental health and professional boxing.
With more than 150 Snap Originals to date and more than 80% of the U.S. Gen Z population watching a Snap Original last year, the company has renewed two of its hit Snap Originals — Dixie and Charli D’Ameli and The Me and You Show, which garnered more than 20 million and 50 million viewers, respectively.
The Zacks Consensus Estimate for Snap’s third-quarter ARPU is pegged at $3.14, suggesting a decrease of 10% from the year-ago quarter’s reported figure.
A steady ad-spending environment is expected to reflect on Snap’s third-quarter top-line numbers.
Advertising has been the only source of revenues for Snap, which has been facing significant competition from the likes of Twitter , Meta Platforms (META - Free Report) and Alphabet (GOOGL - Free Report) owned Google, for ad dollars. A persistent decline in the price-per-ad impression is likely to have dented advertising revenues for the company.
META is pumping resources into developing AI to address solutions for megatrends like a hybrid work environment, which will drive its user base across various platforms like Meta Portal Go. Investments in AI are also expected to draw higher revenues from Meta’s ad business.
SNAP is also giving competition to META in the metaverse space. It collaborated with Vogue to feature a virtual try-on experience of select pieces from Balenciaga, Dior and Gucci, which will be available for snapchatters globally.
Although Meta Platforms is investing aggressively in building the metaverse, Twitter surpassed it as the first social media giant to enter the non-fungible token marketplace by launching a tool to showcase and sell NFTs on its platform.
In its race to target TV ad dollars, Alphabet allowed third-party (Nielsen and comScore) tagging of YouTube videos to determine the effectiveness of ads on YouTube versus ads shown on TV. The Google Preferred program pulls out the top 5% of the most engaging content on YouTube for advertisers. Alphabet has also promised to advertise this content itself in order to boost traffic. Google Preferred is attracting spending on the platform.