Snap stock was trading at $10.90 as of 09:58 AM EDT

Snap (NYSE:SNAP), which warned in May that the economy was worsening, is likely to beat expectations when it reports its third-quarter earnings on Thursday after the closing bell. This is because the company disappointed investors with its second-quarter report in July.

On May 23, the business abruptly lowered its outlook and put doubt on the projections it had made just four weeks earlier. The company warned that Q2 revenues and EBITDA would be below the low end of its previous range because “the macroeconomic climate has worsened further and faster than expected” since it gave guidance on April 21, 2022. The next day, the shares fell by 43%, which was the most ever in one day, and the warning may have destroyed the whole market.

Due to a drop in revenue in Q2, the company said it would stop hiring new people and increasing operating costs. The stock dropped more than 39% the next day. Overall, Snap stock (SNAP) has dropped 86% over the past 12 months and 77% over the past year.

Expert opinion on Snap stock

Analysts have paid attention. Estimates for quarterly earnings per share have been revised down 17 times in the last three months, compared to just three rises. Even more noticeably, revenue estimates have been reduced: 29 decreases have been made to that number in the last three months compared to only two increases.

The threshold has been lowered for struggling businesses. But many people think that the Internet ad market had gotten a lot better since the first half of 2022 when some scary predictions were made. This could be good for Snap (NYSE:SNAP). In its results call on July 21, Snap stated that the then-young Q3’s revenue was essentially flat year over year. In part because of the improvement in online advertising despite ongoing macroeconomic weakness, Citi kept Meta Platforms as one of its top picks on Wednesday.

Following a meager $0.01 profit per share in the fourth quarter of 2021, Wall Street anticipates Snap reporting adjusted earnings per share of -$0.01 for the third consecutive quarter. The expected revenue is $1.14 billion, a 6.4% increase from the previous year and the highest level since the end of 2021.

The forecasted daily active users will be 358.7 million, an increase of more than 11 million people from one quarter to the next. The average income per user is expected to be $3.19, and the business is expected to have a negative free cash flow of $105.1 million.

Citi put out a short-term positive catalyst watch that pointed to an improvement in the ad business and a better profitability profile as reasons why Snap would probably do better than Wall Street. On Wednesday, Snap’s stock went up 2.5%.

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