Shares of Snap (SNAP 2.89%) have been crushed recently. The stock is down about 55% since it reported third-quarter earnings last October. The Snapchat parent's stock has suffered two critical blows. The first was when it reported its third-quarter results; Snap reported worse-than-expected third-quarter revenue and provided dismal fourth-quarter revenue guidance (at least when compared to analyst expectations). The second major factor weighing on the stock has been a market sell-off that has hit growth tech stocks like Snap particularly hard.
With a backdrop like this, you can bet Snap shareholders are hoping that the company can post an impressive fourth-quarter earnings report. Doing so could rekindle investor interest in the stock and potentially help shares make progress on rebounding.
Ahead of Snap's fourth-quarter earnings report this week, here's a preview of some of the areas the company will need to excel at in order for it to have a shot at impressing the Street.
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Revenue growth
In Snap's third quarter, the company grew its revenue 57% year over year. While this may sound impressive, the $1.067 billion in sales it reported for the period was slightly under management's guidance range for $1.070 to $1.085 billion. And given how Snap has historically crushed its own top-line guidance, this came as quite a surprise.
Investors will be hoping the company can return to reporting revenue well in excess of its guidance range. For Q4, Snap guided for revenue to be between $1.165 billion and $1.205 billion. The mid-point of this guidance range would translate to about 30% year-over-year growth. Though investors are likely hoping that actual revenue comes in above this range.
Analysts, on average, are expecting fourth-quarter revenue of $1.2 billion.
User growth
Investors should also look for continued momentum from Snap when it comes to user growth. With daily active users rising 23% year over year in Q3 to 306, this is one area where the company has been firing on all cylinders.
"Q3 marks our fourth consecutive quarter of year-over-year growth in excess of 20% and it's tied with the prior quarter for the highest rate of growth for our community in more than four years," said Snap chief financial officer Derek Andersen in the company's third-quarter earnings call.
Investors are likely hoping for more of the same in Q4.
Guidance
Finally, investors should look for strong guidance for Q1. While the company has been working through challenges regarding recent changes to ad tracking and measurement on iOS, Snap has been implementing new solutions for its advertisers to address these disruptions to its ad business. The strength (or weakness) of Snap's guidance for first-quarter revenue will give investors some insight into how much confidence management has in its continued efforts to come up with viable solutions to this challenge.
On average, analysts are expecting Snap to guide for first-quarter revenue of $1.01 billion, or about 30% growth.
Investors can tune into Snap's fourth-quarter earnings report after market close on Thursday, Feb. 3.
