Today's video focuses on Snap's (SNAP 0.35%) recent earnings and what long-term investors should watch in the months ahead. Here are some highlights from the video.
- Snap's earnings were not completely horrible. Daily active users were up 23% year over year (YOY) and saw a quarter-over-quarter (QOQ) increase. Average revenue per user was up 28% YOY and was also up QOQ. At the end of the quarter, Snap reported roughly $3.5 billion in cash, cash equivalents, and short-term investments.
- The main reason for Snap's stock price plummeting was that the company's revenue did not meet analysts' expectations, and the upcoming quarter's guidance also fell short of expectations. Snap's management had underestimated the impact of iOS changes on its advertisement solutions, causing the miss in revenue expectations.
- Snap may be a very volatile stock until it improves its advertisement problems. This may take months, and investors should be prepared for a bumpy road. In the meantime, investors should make sure that Snap continues to increase its daily active users. Numerous analysts cut their price targets on Snap after earnings, which may also affect its volatility.
Click the video below for my full thoughts and analysis.
*Stock prices used were the closing prices of Oct. 22, 2021. The video was published on Oct. 24, 2021.