By Senad Karaahmetovic
Snap (NYSE:SNAP) held its second Investor Day as a public company. The event was used by the management to provide an update on a number of key themes and debates, including those tied to augmented reality (AR) and progress on long-term product initiatives.
According to analysts who attended the event, the management’s talked about re-accelerating revenue growth. Some of the tangible objectives shared during the event, for instance, hitting over 1 billion monthly active users (MAUs) in the next 2-3 years from about 750 million today and from roughly 600M at last April’s event. Snap also said that around 250M of its users engage with AR every day.
Here is how sell-side analysts saw yesterday’s event.
Bernstein analysts: “The investor event was a good primer on what Snap's been up to for the new or lapsed investor, but not enough to get investors re-engaged. Engagement is not Snap's problem, yet time spent yesterday across (1) engagement, (2) creators, and (3) monetization/advertisers, was ~60/20/20. We get why Snap focused so much on engagement, as Facebook Blue outgrew Snapchat in the US, and a lack of clarity on revenue trajectory and timing limited what management could say there.”
Evercore ISI analysts: “We remain very impressed by the company’s level of product innovations, and we are struck by the potential monetization unlocks both in its core Ad products (Spotlight engagement doubling Y/Y) and AR features (sponsored ads, shopping lenses), as well as green field opportunities such as Snapchat+ (now 2.5MM subs and $100MM run rate), Snap Map, Camera Kit, and, dare we say, Wearable AR. Snap’s differentiating and impressively sticky demographics (75% of 13-34 year olds, 90% retention after 5 years) also remains an appealing value prop for advertisers.”
Goldman Sachs analysts: “While we came away more constructive on Snap's long-term revenue growth opportunity, we continue to see Snap as a 'Show-me' story over the near-to-medium term and expect the stock to be range bound as investors digest a short-term depressed revenue trajectory paired with low levels of visibility into the broader digital ad environment that is increasingly more mature & competitive with key scaled players making large multi-year investments around artificial intelligence, automation, mixed reality and short-form video.”
BofA analysts: “We felt many of the data points presented were already known (such as under 35 user reach, and total AR/Maps users). While acknowledging that Friends stories time was under pressure, Snap did not address total time spent trends or revisit prior stat of 30+ mins of avg daily usage. Management did not provide any LT financial targets for ARPU, rev or margins (just for GM), or expected incremental margins once revenue accelerates.”
Snap shares fell 4.7% yesterday and are down a further 0.8% in pre-market Friday.