Snap Earnings: Advertisers Still Not Coming to the Platform Despite Impressive User Growth

While Snap has displayed success in attracting new users, it continues to have difficulties bringing in advertisers and increasing user monetization. Snap’s efforts to make its platform easier for advertisers to use its first-party data more effectively and to monetize Spotlight have not yet generated any return for the firm and its shareholders. We are maintaining our $16 fair value estimate and believe investing in this no-moat and Very High Morningstar Uncertainty-rated firm requires patience. While the stock was 3 stars going into the second-quarter earnings release, the 19% after-hours pullback will return it to 4-star territory.