Snapchat Last Chance: Q4 Earnings Report to Make or Break Company's Future

Snap Inc or SnapChat NYSE: SNAP is set to report its Q4 earnings on Tuesday, and investors are wary of what to expect as the company's stock is currently trading near its lowest valuation on record.

With concerns over ad-market weakness and increasing competition, especially from TikTok, investors are uncertain about Snap's prospects for a sustainable recovery.

The Social Media Reality

TikTok, launched by Chinese-based ByteDance in 2016, has taken the social media world by storm and become a dominant player in the short-video space. Its success has led other social media platforms, such as Instagram and Youtube, to launch similar features in a bid to win back users.

However, SnapChat, which was already in the short video space, has suffered the most from TikTok's rise.

Aside from TikTok's continued dominance, national security concerns surrounding the app are also causing uncertainty in the social media space.

There are growing concerns that ByteDance is collecting unnecessary personal data on its users and potentially supplying it to the Chinese government, which is seen as a rival to the U.S. These concerns have led to calls for a domestic TikTok ban from various high-ranking officials and institutions, and Senator Josh Hawley recently announced that he will introduce a bill to ban the app.

What to Expect from Q4 SnapChat Earnings

Snap Inc. is set to report its Q4 earnings on Tuesday and analysts are projecting revenue of $1.3 billion, which is relatively in line with the company's performance in Q4 of 2021. Despite the ongoing challenges posed by ad-market weakness and growing competition, Snap has maintained stable revenue growth over the past year. In the third quarter of 2022, the company reported revenue of $1.13 billion, a 6% year-over-year increase.

At the time of its Q3 earnings report, Snap mentioned that it expected revenue growth to decelerate moving through Q4 due to a decline in advertising revenue. As a result, the company estimates revenue growth to remain flat YoY in the fourth quarter.

Despite these challenges, investors will be looking to see if Snap can deliver on its projections and maintain stable revenue growth in the face of increased competition and a challenging ad-market.

The Q4 earnings report will provide important insights into the state of the online advertising market and the ability of domestic social media platforms to remain competitive in the face of TikTok's dominance.

If TikTok is ultimately banned, it could prove to be a catalyst for domestic social media platforms, with Snap set to benefit the most, along with META and GOOGL.

On the other hand, software giant Oracle, which supports TikTok via its cloud platform, would stand to lose.

Investors will be closely watching Snap's Q4 earnings report and the outcome of the TikTok ban efforts, as they seek to determine the company's potential for a sustainable recovery. With ad-market weakness and increasing competition, it remains to be seen whether Snap can overcome these headwinds and come out on top