SNAP
Reports post-close today. Just a quick reminder that we suspect 4Q17 could be the first time SNAP beats on revenues given the same seasonality dynamics that prevented it from doing so over the past two quarters. It's also possible that SNAP reports accelerating revenue growth given that the Olympic comp effect suppressed 3Q17 revenue growth by 25% percentage points. On DAUs, consensus estimates call for 4Q17 gross-adds to accelerate, which seems somewhat lofty at face value. However, we do need to consider that SNAP has the same DAU definition as TWTR (basically total log-ins), so it's possible 4Q holiday activity could provide that incremental boost over 3Q. We're just teasing this out, we don't have any edge on the quarterly DAU metrics. But that said, it is possible SNAP produces upside on both revenue and DAUs on this print, which we suspect the street would chase since it would appear as if the worst was behind the company, especially if revenue growth accelerates. We're planning to revisit the short after the print.
YELP
Reports Wednesday post-close. We suspect the Transaction segment will add noise to the 4Q17 release. We estimate that consensus is undershooting 4Q17 Transaction revenue on what appears to be a lack consideration for lingering Eat24 revenues, which we estimate could provide an additional $2M in revenue (divestiture closed on October 10th). We also suspect that YELP may report revenue from the GRUB partnership within Advertising revenue, which may be enough to obfuscate a 4Q17 miss in its core segment. If so, we suspect the print will come down to the 2018 guide, which will likely bracket consensus estimates if history repeats itself. But we wouldn't read too much into that as YELP is usually way off the mark with its initial guidance release; it has cut its guide 2 of the last 3 years (3 of 4 if you count the effective 4Q14 guide-down).
TWTR
Reports Thursday morning. TWTR seems like it's up on a rope given what has been a sentiment-driven rally in the stock since 3Q17 results. That said, we suspect TWTR needs to either flash a recovery in its 4Q17 results/1Q18 guide or maintain double-digit DAU growth to buoy the stock on the print. On the former, we do see a pathway to return to ad revenue growth in 4Q17 given that the legacy headwind likely started waning through the quarter. So at a minimum, TWTR should be able to beat ad revenue growth estimates of -8% y/y. We're more focused on how TWTR approaches the 1Q18 guide since we suspect it could return to double-digit ad revenue growth by 1H18. Regarding DAUs, the hurdle isn't all that bad considering the progress it made in 3Q17. We estimate that TWTR could sustain double-digit DAU growth as long as it maintains its 3Q17 DAU base, which is within the realm of reason given TWTR's growing number of live events and its newfound growth-hacking initiatives.
Let us know if you have any questions or would like to discuss in more detail.
