About five years ago, Facebook was in a similar position as Snap is in now: Its stock had been battered since its red-hot IPO at the beginning of the year, and investors were nervous about big insiders dumping their shares once the post IPO “lock up” on stock selling was lifted.
But then CEO Mark Zuckerberg announced that he would not sell any of his Facebook shares for one year. Wall Street saw the commitment as a reassuring sign that Zuckerberg’s head was in the right place, and Facebook’s stock immediately started to rebound:
Evan Spiegel, 27, could help turn Snap’s stock around by making the same commitment when his company reports its second quarter earnings on Thursday. Snap has lost billions of dollars in value and its stock is trading more than 50% below the peak it reached on its first day of trading in March.
A sign of confidence
Along with cofounder and CTO Bobby Murphy, Spiegel is Snap’s largest individual shareholder. And he’s on track to wield sole majority voting rights as the stock award he received for taking the company public vests over the next two years.
A vow by Spiegel not to sell would signal his commitment to leading Snap from the trenches, even as his own employees have been given little insight into his long term vision. A Snap spokesperson didn’t respond to a request for comment on whether Spiegel plans to hold onto his shares or start selling soon.
Aside from any insight Spiegel gives on the matter during this week’s conference call with analysts, the main thing Wall Street is looking for is whether Snap was able to continue growing its user base amid fierce competition from Facebook.
While the most bullish analysts have predicted that Snapchat will net around 10 million more daily active users (DAU), most estimates are more conservative and fall within the 5-7 million DAU range.
Another key metric to watch will be any change in Snap’s average revenue per user (ARPU), as the company has repeatedly touted its deep app engagement as a way to make more money off the users it already has. A significant spike in ARPU will assuage Wall Street’s fear that Snap’s ability to monetise its base isn’t existentially threatened by Facebook.
Here are the expected numbers for Snap’s Q2 earnings, based on analyst projections compiled by Bloomberg:
- Revenue: $US189 million, up from $US71.8 million in the year-ago period.
- EPS (adjusted): loss of $US0.15.
Get the latest Snap stock price here.