Co-founder and CEO of Snap Inc. Evan Spiegel holds up a Pixy drone while speaking during the Viva Technology conference dedicated to innovation and startups, at the Porte de Versailles exhibition center in Paris, France June 17, 2022.
Benoit Tessier | Reuters
Snap
shares rose nearly 12% on Monday following reports of an internal CEO memo indicating that the social messaging company could exceed expectations for 2024.
Evan Spiegel, the company’s co-founder and CEO, informed employees in a September memo that Snap could achieve over 475 million daily active users in 2024, surpassing analysts’ projection of 448 million, as reported by the Verge’s article.
The memo also stated that Snap’s advertising revenue growth for 2024 could exceed 20%, surpassing consensus expectations of just over 14% according to Bernstein analyst Mark Schilsky’s Tech Specialists newsletter.
Additionally, the memo set a goal of achieving $500 million in adjusted EBITDA in 2023, which Bernstein noted as a “sizeable beat” compared to current analyst projections of $250 million.
Snap confirmed the figures mentioned in the memo with CNBC, but clarified that they were “stretch, internal goals only.”
Schilsky advised the company against revealing such goals in employee memos and urged them to focus on shareholders’ interests.
“Stop doing this! For the love of your shareholders stop putting out aspirational goals like this,” wrote Schilsky. “I know this was an internal memo, but management must have known it was going to leak.”
Snap has faced challenges this year, struggling to improve its online advertising system following Apple’s 2021 iOS privacy update, which limited its ability to track users for targeted ads. The company has also faced difficulties amidst a challenging digital advertising economy affected by the Russia-Ukraine war and companies reducing marketing efforts due to economic uncertainty.
In July, Snap shares dropped more than 17% after providing guidance for the current quarter that fell short of analysts’ expectations.
“The stock is near its lows, expectations are incredibly low (although perhaps that changed after this leak), and the digital ad market is generally performing well,” Schilsky commented. “As long as SNAP doesn’t completely miss the quarter, like it has in the past five, the stock could experience a significant jump on the next earnings release.”
Snap is scheduled to report its third-quarter earnings on October 24.
Correction: An earlier version of this story misstated the nature of the figures mentioned in the memo—they were goals, not projections.
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