Social media company Snap (NYSE: SNAP) has seen its stock get hammered recently. Shares have slid 56% in the past six months, driven by a combination of a broad stock market decline and recent iOS changes affecting many digital advertisers.
Importantly, investors may get insight soon into how the company is managing iOS challenges. Snap has announced the date of its first-quarter financial results: Thursday, April 21. The quarter will likely provide a window into the Snap iOS problem and other items important to investors. Here are three key areas to check on when Snap reports earnings.
Image source: Getty Images.
1. iOS impact
First, investors should realize that Snap isn't standing idly by as iOS changes its advertising tracking and measurement features.
"Our sales team is working hard to help advertisers adapt to the new measurement paradigms, brought about by Apple's iOS privacy-related changes," said Snap chief business officer Jeremi Gorman in the company's most recentearnings call The company's product team has made changes, too. All of this has led to the company beginning to recover from the impact of iOS changes earlier than management had initially anticipated, management explained in its fourth-quarter call.
In fact, management said in the company's fourth-quarterearnings callthat it could overcome the negative factors weighing on its business due to iOS platform changes as early as "a couple more quarters." This is much earlier than Meta Platforms' view for this to be a "multiyear journey."
Investors should look for more positive news on this front in management's first-quarter update.
2. Revenue growth
Snap provided promising guidance for the first quarter of 2022 during their latestearnings call despite these recent platform changes. The social media company expects to generate between $1.03 billion and $1.08 billion of revenue in the first quarter, representing between 34% to 38% revenue growth on a year-over-year basis.
This growth is expected to help Snap break even on adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) basis in the first quarter.
3. Daily active users
Management said it expects continued growth in daily active users (DAUs). Specifically, the company guided for DAUs between 328 million and 330 million. This compares to 319 million in the prior quarter and 280 million in the year-ago period. If Snap's first-quarter results meet Snap's internal guidance for the key metric, this would generate year-over-year DAU growth of 17%. This is quite impressive on its own, especially if Snap continues to find ways to monetize its user base more efficiently.
Overall, it seems Snap is confident in continued business growth despite its current challenges.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Daniel Sparks owns Apple. The Motley Fool owns and recommends Apple and Meta Platforms, Inc. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
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