Yesterday's Top Earnings - Snap Inc And Blue Apron Holdings Inc

Why Snap Stock Tanked Post Earnings.

Todays top earnings - Snap Inc and Blue Apron

Snap Inc (NYSE:SNAP), the company that runs social media app Snapchat, reported worse than expected quarterly results on Thursday. Snap registered a loss that was larger than expected, while revenue missed estimates. The company also added fewer users than Wall Street analysts expected, implying that the earnings release disappointed on nearly every front. Snap added 7 million Daily Active Users (DAUs) during the second quarter, which was even worse than the already disappointing number in the first quarter.

Snap added 8 million DAUs during Q1 this year, and the latest numbers raise concerns over growth trajectory, since Snap is largely an advertising platform. Further, this is the second time Snap has missed revenue estimates, implying that the company has failed to meet expectations in two out two earnings releases as a public company. In terms of the headline numbers, Snap's adjusted earnings per share registered a loss of 16 cents, against expectations of 14 cents a share. Meanwhile, revenue came in at $181.7 million, falling short of the expected $186.2 million. Revenue grew by 153% over the year ago figure of $71.8 million. However, with DAUs coming at 173 million, instead of the expected 175 million, concerns that Snap may not be able to sustain the current pace of growth, continue to persist. According to FactSet, Snap's Average Revenue Per User (ARPU) also disappointed the street, coming in at $1.05, against expectations of $1.07.

Snapchat's sluggish growth stands in stark contrast to that of Instagram, which has added its latest 100 million Monthly Active Users (MAUs) in about 3-4 months, while taking the number of 'Stories' users past 250 million DAUs. Stories is a feature Facebook copied from Snapchat. However, the former has been successful in leveraging the feature on its various properties, including WhatsApp, Facebook and Instagram. Snap stock is now down by over 14% in pre market trading, and looks set to take a big hit when markets open today.

Why Blue Apron Stock Tanked Post Earnings.

BLUE APRON HLDG (NYSE:APRN) shares slumped by over 17% yesterday, after the company reported wider than expected losses in its first post-IPO earnings report. Blue Apron's adjusted loss per share came in at 47 cents, which missed the expectations of a loss of 30 cents by a big margin. The company’s losses per share for the first half of 2017 stood at $1.25. Revenue increased to $238.06 million from $201.92 million during the same quarter last year. The revenue figure managed to marginally beat analysts' expectation of $235.81 million. Customers increased 23% year-over-year and declined 9% quarter-over-quarter coming in at 943,000.

Blue Apron is planning to hold back on its marketing spend, to curb its losses and curtail cash burn. However, this has resulted in a drop in the number of customers. As it appears, the current scenario could be a choice between two different ways to burn cash. Either Blue Apron will have to spend more to acquire users, which will result in losses, or risk stagnation or reduction in the number of customers, both of which are likely to cause bigger losses.

Blue Apron began to aggressively ramp marketing spends as it sought to acquire customers. However, the problem quickly turned into a customer retention issue, and the company had to focus on getting those customers to stick around and make repeat orders. This time around, the company saw an improvement on this count, with its customer base spending more money and buying more meals on the platform. However, there's no evidence yet that Blue Apron can grow its customer base if it curbs spends on customer acquisition and marketing. In fact, the numbers suggest that the opposite might be true, and understandably, that's a bad situation to be in.

Quoting from a post,"the company said its average revenue per customer increased to $251 for the second quarter, up from $236 in the previous quarter, but below $264 in the previous year. This helped boost the company's revenue 18 percent to $238.1 million for the quarter, beating analyst exceptions." Meanwhile, "Blue Apron now estimates that its net loss will be between $121 million and $128 million in the second half while net revenue will fall between $380 million and $400 million." The projected loss is much wider than the $31.6 million loss recorded in the recent quarter, which is also likely to have spooked investors.

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Vikram Nagarkar Vikram Nagarkar   on Amigobulls :

Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a certified/registered investment advisor, and the opinions expressed should not be treated as investment advice.

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