Q1 Daily Active User Numbers Could Make Or Break Snap

Traders are looking for two key numbers from most stocks this earnings season: revenue and EPS. However, for certain select stocks, there are even more important numbers ahead.

According to Barclays analyst Ross Sandler, Snap Inc (NYSE: SNAP) is one of those stocks that has more important numbers than earnings and revenue in the eyes of traders.

Sandler says the Snap story is all about users, particularly Snap’s daily active users (DAU).

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He predicts Snap’s Q1 earnings will be a binary event for the stock depending on the company’s Q1 DAU number. If Snap reports anything above the 9-10 million range, the stock could see major upside. Any number below 9 million would likely drive significant downside.

Sandler says market expectations seem relatively low for Snap, as traders have grown increasingly concerned about competition from Facebook Inc (NASDAQ: FB) and Alphabet Inc (NASDAQ: GOOGL). An updated DAU number will be a strong indication of whether Snap is gaining or losing momentum.

“The rest of the 1Q key metrics are far less important given the early stage of [the] SNAP ads business, and market cap hinges on investors’ belief (or not) that SNAP can become the next big platform behind Facebook and Google,” Sandler explains.

Sandler is cautiously optimistic that Snap’s DAU number will come in on the high end of the expected range, but Barclays remains on the sidelines on the stock for now. The firm maintains an Equal-Weight rating and $24 price target for Snap.