A deep dive into Facebook, Snapchat and Twitter

Posted by Visible Alpha on 4/11/18 10:12 AM

Go Beyond Consensus: Deep dive into Facebook, Snap and Twitter” is a part of a webinar series hosted by Visible Alpha. This webinar takes a look at three social media companies with Visible Alpha Insights, an investment research technology platform that provides instant access to deep forecast data and unique analytics on thousands of companies. For each company, we present the story, the questions investors are asking and a summary of the insights our platform can provide.

Note: The data used in this presentation was from April 3, 2018.


The Story: Mounting issues threaten business

Stock performance is down due to a number of issues threatening Facebook’s business:

  1. Data breaches and misuse by Cambridge Analytica
  2. Changes to the newsfeed algorithm to prioritize posts from friends and family over public content
  3. Increased government scrutiny and potential regulation
  4. User backlash (#deletefacebook)

The Question: Facebook stock has declined as issues have mounted. Do sell-side analysts believe this will impact financials?

The Insights: Even though stock performance has declined due to the mounting issues mentioned above, sell-side analysts have not significantly revised their estimates for advertising revenue, ad impressions and GAAP Total Cost and Expenses. One possible explanation is that Instagram is expected to grow at a rapid rate, offsetting any weaknesses at Facebook’s core. Analysts expect Instagram’s Monthly Active Users (MAUs) and Daily Active Users (DAUs) to grow roughly three times the size of Twitter’s MAUs and Snapchat’s DAUs, and ad revenue is also expected to experience massive growth.


The Story: Snap outperforms estimates, estimates remain unchanged

SNAP stock is up 14% since November 21, 2017, and the fourth quarter showed multiple metrics outperforming estimates. However, analysts have not significantly revised estimates on key metrics.

The Question: Why has the stock outperformed despite estimates remaining largely unchanged?

The Insights: The sudden stock reaction is likely due to a reversal in DAU performance relative to expectations. Additionally, we are seeing more agreement among analysts, which could be a result of less uncertainty as the switch to programmatic advertising settles.


The Story: Signs of life in 4Q17

Twitter reported positive YoY growth in 4Q17 for the first time since 3Q16, and analysts expect the momentum to continue.

The Question: What is driving Twitter’s return to growth?

The Insights: Until recently, Twitter’s growth has been rather disappointing. Because the company is delivering on the advertising product and improvements in execution, analysts expect further improvements going forward, with ad revenue growth expected over the next two years.

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Topics: Company Analysis