Volatile Tech stock to watch Snap Inc (NYSE: SNAP)

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Snap Inc (NYSE: SNAP) stock rose over 1.4% on 23rd October, 2019 (as of 9:56 am GMT-4; Source: Google finance) driven by better than expected results for the third quarter of FY 19. The company’s net loss narrowed to $227.4 million, from $325.1 million, a year earlier. Free cash flow for the third quarter was negative $84 million, which is an improvement of $75 million year-over-year and $19 million quarter-over-quarter, due to significant improvements in adjusted EBITDA that were partially offset by growth in net working capital.

Snap’s user base grew to 210 million daily active users, which was the third quarter in a row of growth for the company, that experienced the user base shrink from the first quarter through the third quarter of last year. This is better than 207 million forecast by FactSet. The average revenue per user in the quarter grew 33% to $2.12 compared to $2.10 forecast by FactSet, with the highest rate of ARPU growth coming in North America at 43%. Snapchat is facing competition from several other apps for the coveted younger demographic, including Facebook Inc’s Instagram and newer apps like TikTok, used to create and share short lip-sync, comedy and talent videos.

SNAP in the third quarter of FY 19 has reported the adjusted loss per share of 4 cents, beating the analysts’ estimates for the adjusted loss per share of 5 cents, as per forecast by Refinitiv. The company had reported the adjusted revenue growth of 50 percent to $446 million in the third quarter of FY 19, beating the analysts’ estimates for revenue of $435.1 million. The company has reported a gross margin of 51%, up from 36% gross margin reported a year earlier. Adjusted EBITDA losses were $42 million in Q3 2019, which is an improvement of $96 million over the prior year and $36 million over the prior quarter.

The revenue in the fourth quarter is expected to be in the range of $540 million to $560 million, which is a lower to expected sales of $555.4 million, according to Refinitiv. At the midpoint of its guidance range, sales in the fourth quarter would grow 41% from a year earlier. The company gave a dissapointing forecast for the fourth quarter, because 2019 will include one less week between Black Friday and the end of the holiday shopping season, which is Snap’s peak demand period.

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