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Analysts Expect Breakeven For Snap Inc. (NYSE:SNAP)

Simply Wall St

Snap Inc.'s (NYSE:SNAP): Snap Inc. operates as a camera company in the United States and internationally. The US$24b market-cap company announced a latest loss of -US$1.0b on 31 December 2019 for its most recent financial year result. The most pressing concern for investors is SNAP’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for SNAP’s growth and when analysts expect the company to become profitable.

See our latest analysis for Snap

According to the 34 industry analysts covering SNAP, the consensus is breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$48m in 2022. So, SNAP is predicted to breakeven approximately 2 years from today. How fast will SNAP have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 61% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, SNAP may become profitable much later than analysts predict.

NYSE:SNAP Past and Future Earnings, February 7th 2020

I’m not going to go through company-specific developments for SNAP given that this is a high-level summary, though, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing I’d like to point out is that SNAP has managed its capital prudently, with debt making up 39% of equity. This means that SNAP has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of SNAP to cover in one brief article, but the key fundamentals for the company can all be found in one place – SNAP’s company page on Simply Wall St. I’ve also put together a list of essential factors you should look at:

  1. Valuation: What is SNAP worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether SNAP is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Snap’s board and the CEO’s back ground.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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