NVIDIA looks poised to crush Wall Street estimates. Can Snap Inc. borrow a leaf from the NVIDIA earnings playbook?
Our top earnings coverage today focusses on two extremely popular names: NVIDIA (NASDAQ:NVDA) and Snap Inc (NYSE:SNAP), both of which are due to announce their earnings after market close today. Cryptocurrency boom and rising interest in gaming will be the main focal point of NVIDIA stock investors. In the case of Snap Inc., user growth on the company's photo sharing platform, Snapchat, could well decide the trajectory the stock takes following the earnings announcement.
Buy NVIDIA Corporation (NASDAQ:NVDA) Stock Ahead Of Q2 Earnings.
Santa Clara, California based GPU maker NVIDIA Corporation will report its Q2 earnings today. Wall Street expects the Jensen Huang led company to report non-GAAP earnings of 70 cents a share on revenue of $ 1.96 billion. As we had mentioned in our NVIDIA earnings preview, NVIDIA looks set for an earnings beat. More than the headline numbers, investors will also be closely watching the Datacenter and Automotive, which are the emerging growth engines for the GPU giant. Gaming, which remains the top revenue/profit contributor will not be ignored and any positive commentary on these fronts will be cheered by the bulls.
The Cryptocurrency boom had created a lot of buzz around NVIDIA stock back in June, and is now back in focus with Bitcoin, the most popular cryptocurrency, rising to fresh all time highs of $3288 on Wednesday. NVIDIA jumped on the cryptocurrency boom, announcing GPUs tailored for the needs of cryptocurrency miners at the end of Q2. Will the cryptocurrency boom sustain? Any commentary on this front will be closely followed. In case the cryptocurrency boom continues to sustain, the impact could be felt in NVIDIA's Q3 guidance.
Gaming, driven by the Nintendo Switch and cryptocurrency tailwinds, make NVIDIA stock a good buy ahead of Q2 earnings. Well, that's what Jefferies analyst Mark Lipacis believes. In a client note yesterday, the analyst reiterated a $180 price target on the ticker, implying a 4.5% upside to the last closing price.
Can SNAP Inc. Improve On Its Q1 Showing?
The most popular IPO of this year has quickly become one of the worst performing IPOs of the year. Shares of Virginia Beach, California based SNAP Inc., parent of popular photo sharing platform Snapchat, were last spotted at $13.56 levels, down 20% from the IPO price of $17 a share. Snap's first quarterly report following the IPO was nothing short of a disaster, with the company missing analyst consensus on nearly every metric; far from the estimate crushing performance you'd expect from a company trading at 'Snappy' premium valuations. Will the Q2 numbers be any better? Can they help Snap stock break out of the downtrend the stock currently seems to be caught up in?
Recent commentary from Wall Street has been encouraging for SNAP bulls. Deutsche Bank analyst Lloyd Walmsley maintained Snap stock at buy, citing the company's "thriving" innovation and ad product tech. In what's probably a confusing move, the analyst shaved his price target by $3, for a $20 price outlook on SNAP stock, representing a 47% upside from the last close.
As we had noted in our recent detailed Snap Q2 earnings preview, WPP expects to double their ad spends on the Snapchat platform to $200 million, which could contribute nearly a fifth of Snap Inc. revenue this year. While dependency on WPP can be cited as a key risk, it could also help Snap beat estimates and also pave the way for other big ad agencies to undertake larger spends on the platform.
However, a revenue/earnings beat will not necessarily be enough for SNAP stock to chart an upward trajectory. Snap Inc. needs more than that. It needs to find ways to revive user growth on Snapchat, which has virtually come to a halt. On the other hand, competitor Instagram has been adding users by the hundreds of millions, piling on the pressure on SNAP stock and bringing misery for SNAP investors. Can Snapchat find ways to revive user growth? Well, that remains a key question ahead of the call. Commentary on this front could solely decide the post-earnings movement of SNAP stock price.
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