Snap Inc is reporting Q2 earnings after the bell on Monday. The stock currently trades for $4.7 which marks the lowest price ever going into earnings. The options market is implying roughly a 14 % to 17 % one day move ahead of earnings. Should the stock fall 17 % it would take the price to $3.9 which is just shy of the historical all time intra day low of $3.8 in March earlier this year.
RDDT was down over 20 % as a result of earnings. Specifically, the Street seemed to worry about Reddit’s future growth prospects in its most profitable region, North America, and the fact that search traffic is becoming less reliable. Meanwhile, Snap Inc has long been struggling with market maturity in North America. The market is expected to watch Snap’s advertising demand and guidance, North America DAUs and ARPU, AI’s impact on digital advertising, and management commentary on engagement trends.
Reddit is exceptionally profitable but the growth story seems to be less amazing than previously thought. Snap already has grown a lot and annual revenue is $6 billion which is three times more than Reddit’s annual revenue. However, Snap sucks at making a profit.
Reddit: the market wants to see faster growth. Snap: the market is ok with $6 billion revenue and the user base but wants to see profitability. Growth story vs monetization story.
Another important distinction: Even after RDDT’s 20 % sell off the trailing P/S is 13x while for SNAP it’s 1.3x.
SNAP is pretty much down on any timeline (up 20 % from March lows being the exception). RDDT was up like 350 % since IPO in 2024 prior to yesterday’s crash. Does that mean SNAP can’t crash 20 % on Monday when they report earnings? Sure it can. But maybe expectations are lower for SNAP than they were for RDDT. Thoughts?
A final note- while Evan Spiegel will do whatever he feels like regardless of shareholder interests, I do think he feels an urge to stop the negative snowballing effect that started after the unveiling of his favorite invention, the AR glasses Specs. Maybe he will actually try to pump the stock for this earnings call? He’s been embarrassed enough as of late. Yesterday they announced they’ll do an official presentation of Specs on September 16.