Snap (NYSE:SNAP) shares crashed Friday after the company reported its latest earnings report. Net sales
of $1.13 billion in Q3 missed analysts' expectations of $1.14 billion. A key metric that the company
underperformed on was average revenue per user, which came in at $3.11 versus Wall Street's
projections of $3.17. The company also didn't provide guidance for the fourth quarter but did suggest
revenue growth will slow down during the period.
The one big positive from the earnings report was that Snap's adjusted earnings per share was $0.08,
better than the $0.02 loss that analysts were expecting.
Nonetheless, Snap's stock hit a new 52-week low on Friday amid the selloff, falling well below $8. It's a
sharp contrast to where the stock was a year ago when it was comfortably above $50.
For contrarian investors, however, Snap could make for an attractive buy at such a reduced price. The
company is still in cost-cutting mode and with adjusted earnings looking strong, revenue only slightly
missing expectations, and global daily active users totaling 363 million (beating estimates of 358.2
million), Snap doesn't look to be in as bad a shape as the recent selloff suggests. Plus, it reported $1.9
billion in cash and cash equivalents as of the end of September.
There risk is still with the stock as the danger is that companies continue to scale back on advertising,
which, in turn, will hurt Snap's top line. But that's a temporary problem and it won't last forever. For
investors willing to hang on during a downturn, buying Snap today could lead to some great gains in the
long run.
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