Snap Slumps as Market Sees ‘Clear Negative’ in CFO Departure

(Bloomberg) -- Snap Inc. shares tumbled in early trading on Wednesday, one day after the social media company’s chief financial officer said he was resigning after just eight months in the job. Snap also gave a fourth-quarter outlook for both sales and Ebitda.

The stock was down 13 percent, putting it on track for its biggest one-day percentage drop since May. At current levels, shares are down more than 70 percent from last year’s peak in February.

Here’s what analysts are saying about the news:

RBC Capital Markets (Mark Mahaney)

The resignation “increases our concern over management execution, and valuation isn’t compellingly supportive here.”

The earnings outlook was “mixed,” with “the positive being that SNAP’s Ebitda losses are materially being reduced,” although “revenue growth deceleration appears to be continuing.” Notes that daily active user (DAU) trends for the fourth quarter weren’t disclosed, “leading us to believe that they likely continued to decline.”

Downgrades to sector perform from outperform but maintains price target at $8, which is slightly above the $7.57 average price target of analysts polled by Bloomberg.

Goldman Sachs (Heath Terry)

The “lack of continuity in management” is an “an incremental risk factor cause for SNAP, particularly given ongoing competitive challenges.”

Affirms neutral rating and $6 target.

Jefferies (Brent Thill)

The resignation is “a clear negative in our mind as 2 CFOs have left within 1 year of each other without meaningful financial progress.” Thill adds that “while results seem decent for 4Q, questions around management remain for Snap.”

Maintains hold rating and $7 price target.

“We continue to be concerned around Snap’s ability to re-invigorate growth in DAUs after falling sequentially in 2 straight quarters with negative commentary around 4Q users. Additionally, Snap is increasingly being viewed as a communication platform from its core users with minimal interaction with the content and advertising side in Discover.”

To contact the reporter on this story: Ryan Vlastelica in New York at rvlastelica1@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Scott Schnipper

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