US$13.39: That's What Analysts Think Snap Inc. (NYSE:SNAP) Is Worth After Its Latest Results

One of the biggest stories of last week was how Snap Inc. (NYSE:SNAP) shares plunged 35% in the week since its latest quarterly results, closing yesterday at US$8.71. The results look positive overall; while revenues of US$1.2b were in line with analyst predictions, statutory losses were 4.9% smaller than expected, with Snap losing US$0.15 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Snap

After the latest results, the 38 analysts covering Snap are now predicting revenues of US$5.35b in 2024. If met, this would reflect a credible 7.4% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 25% to US$0.53. Before this latest report, the consensus had been expecting revenues of US$5.38b and US$0.51 per share in losses. So it's pretty clear consensus is mixed on Snap after the new consensus numbers; while the analysts held their revenue numbers steady, they also administered a pronounced increase to per-share loss expectations.

With the increase in forecast losses for next year, it's perhaps no surprise to see that the average price target dipped 13% to US$13.39, with the analysts signalling that growing losses would be a definite concern. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Snap, with the most bullish analyst valuing it at US$18.00 and the most bearish at US$9.50 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Snap's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 15% growth on an annualised basis. This is compared to a historical growth rate of 23% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 10% per year. So it's pretty clear that, while Snap's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Snap analysts - going out to 2026, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 3 warning signs for Snap you should know about.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com