Momentum continues to work against Snap, Inc. (NYSE:SNAP) these days. Shares of Snapchat's parent company slipped another 3% last week, taking a hit after Facebook (NASDAQ: FB) announced a major milestone for its Instagram Stories platform.
Snap stock continues to trade above its IPO price of $17, but the direction it's going isn't very encouraging for those long on the shares, which have now fallen for three consecutive weeks, shedding 11% of their value in that time. The shares soared in their first two days of trading, but they have gone on to decline in five of their first six full weeks of trading.
Not every bull is smarting, and we're not even talking about those who got in on the IPO. The stock still managed to close above $20 every day last week, something that wasn't the case back in mid-March when it closed in the teens for three straight trading days. However, it's clear that the trading trend is working against Snap these days.
Snap it off
Last week's dagger was Facebook revealing that Instagram Stories -- the Snapchat-like platform that Instagram rolled out last summer -- has now surpassed 200 million daily active users. It's a pretty big feat for an offering that was launched less than a year ago, and now surpassing the 161 million daily active users for Snap.
Snapchat's growth was already starting to decelerate. It tacked on just 5 million more daily active users during the fourth quarter of last year, and that places a lot of pressure on it as it approaches its first quarterly report as a public company.
Snap announced last week that it will report fresh financial results on May 10, after the market close. It's not going to catch up to Instagram, but investors will want to see how Snap is holding up as Facebook adds more Snapchat-like features to both Facebook and Instagram. Is the user base still growing at a decelerating pace? If that is the case, Snap better make sure that it's doing a better job of monetizing its sizable audience.
Analysts are all over the map. They are all bracing for another quarterly deficit. No one is expecting Snap to turn the corner of profitability anytime soon. However, Wall Street pros expect revenue to clock in as low as $125 million and as high as $195.9 million. It's a pretty wide range given the $55.3 million it scored as revenue a year earlier, representing growth of 126% to 254%. Whether it lands at the low end or grows more than twice that clip at the high end will dictate the stock's direction. Snap has been meandering lower since its initial IPO pop, and its first big test is now a few weeks away.