Quick Comments On Snap Earnings And Stock Collapse For May 11 2017

The first release of Snap’s earnings failed to excite Wall Street. Earnings failed to meet estimates and overnight the stock collapsed after hours by 23% to reach $17.60 after hours. That places the stock just above Snap’s original entry price of $17.

I didn’t enter a trade in snap but in hindsight I definitely should have.

They reported a loss of $2.21 billion or $2.31 a share which was a staggering amount. Snap blamed the loss on $2 billion of what they termed “compensation-related expenses” from their March initial public offering.

Somewhat shocking, CEO Evan Spiegel received a $750 million bonus for taking Snap public.

Revenue overall rose to $150 million which was about $8 million below estimates.

Daily active users which is probably one of the most important measures for a social media company like Snap, grew 5% in the quarter to 166 million which again was below estimates by about 2 million.

Its main competitor is Facebook which in its earnings announced 2 billion monthly users. For now Snap has a long way to go. I will not be trading the company on Thursday but if it falls below $17, you must wonder if the stock won’t bounce back, even a little. A move below $17 is probably where investors should consider whether to pick up a handful of shares for a possible bounce back. This is a speculative trade and definitely not for everyone. It will be interesting to see how deeply the stock falls when trading resumes on Thursday. Often these after hours plunges are not carried into regular trading hours. In other cases, the after hours sessions are not nearly as bad as during regular hours, so tomorrow will definitely be an interesting day.

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