Snapchat's 2Q19 showed a turnaround moment with beats on user growth and revenue, but a look beyond the headlines through the lens of our text analytics platform shows that while Deception has tapered off SNAP's 1Q18 high, the trend in Cost-Price is worth a closer examination.
Snapchat (NYSE: SNAP) reported Q2 2019 performance yesterday, turning a corner from recent lackluster performance by beating expectations on user growth (13M vs 2M), revenue ($388M vs $360M), and losses per share (19¢ vs 22¢).
We took a trip down memory lane and looked at Amenity data on Snap from the company’s IPO in 2017 to today. We demonstrate below that our models do a solid job tracking the shift in sentiment.
The summary view of Snap’s recent history over the last four quarters offered in our Viewer (see below) provides a quick gauge of the recent directionality of positive and negative sentiment.
Snap’s 2Q19 call yields an Amenity Score of 67, posting a quarter-to-quarter gain of +47. The Amenity Score captures the overall sentiment within an earnings call transcript and represents a weighted average of extracted events within the text with a possible range between -100 and +100.
Over the past three quarters, we identify moderating deceptive language, improving positivity around guidance and market position, diminishing focus on the cost-price equation, and some recently emerged net positivity on headwinds and tailwinds facing the company. These favorable trends in net sentiment related to key fundamental drivers help to paint an objective picture of the tides turning in Snap’s favor.
Looking at the full timeline since Snap’s IPO, we see deceptive language peak during the 1Q18 results call and moderate substantially in the following quarters with a lower bound hit during the 3Q18 call. The figure below portrays the number of events our model classifies as deceptive and details Amenity’s deception score on a quarterly basis.
While slightly up on a quarter-to-quarter basis, the 2Q19 deception count and score are in line with the moderating trend we observe since the 1Q18 results. This moderation suggests improving clarity and directness on the part of management, which may well represent a deeper righting of the ship.
For illustrative purposes, we highlight below the highest ranked deceptive language events as scored by our Deception Model in the peak quarter of 1Q18 and most recent quarter of 2Q19:
SNAP (1Q18): Evan Spiegel, CEO
SNAP (2Q19): Derek Andersen, CFO
We highlight the spike in cost-price positive sentiment in 4Q18, which we believe would have warranted close real-time examination by an analyst given the magnitude of the ramp up. The dissipation of the topic over the following two quarters in the context of moderating deceptive language in the same period may be indicative of a leading set of fundamental drivers.
We present an illustrative example below that portrays how a concerted, positive focus on the cost-price in 4Q18 is bookended by positive outcomes on the same lines.
SNAP (4Q18): Jeremi Gorman, Chief Business Officer
SNAP (4Q18): Lara Sweet, Interim CFO & CAO
SNAP (2Q19): Evan Spiegel, CEO
SNAP (2Q19): Derek Andersen, CFO
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This communication does not represent investment advice. Transcript text provided by S&P Global Market Intelligence.
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