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Snap (SNAP) is expected to report results on its first quarter on Thursday, April 27, with a conference call scheduled for 5:30 pm EDT. What to watch for:

FEW NEAR-TERM TANGIBLE TAILWINDS: In a research note ahead of Snap’s quarterly results, Benchmark says it expects “Q1 stable/Q2 questionable” commentary from the company’s management. The firm’s unscientific buyside polling suggests most are expecting the worst – not surprising after 3 consecutive earnings disappointments – and while Benchmark suspects the mid-point of Snap’s wide Q1 revenue guide will be satisfied, lack of buyer momentum in the ad markets broadly leaves few near-term tangible tailwinds. The one bright spot could be an update on the rollout of its rebuilt DR stack, commentary that was surprisingly absent from its Partner Summit last week, the firm notes. While still in testing, it has heard positive commentary on expanded DR performance outcomes. Benchmark has a Hold rating on the shares.

TOUGH ENVIRONMENT: BofA expects Snap to report Q1 revenue of $1.03B, down 3% year-over-year, versus Street’s estimated of $1.01B, down 5%., with April trending slightly down year-over-year. The firm’s ad checks are mixed and, in general, suggest February was better than January, but ongoing pressure on experimental spend and shit to larger platforms. Further, BofA expects Q1 Opex to be down 7% quarter-over-quarter, with EBITDA at $21M, in line with Street, though historical beats suggest upside. For daily average users, the firm expects in line 16% year-over-year growth to 384M DAUs.

First quarter call positives, BofA says, could include Ad spend acceleration, increasing advertiser adoption of Snap’s DR solutions driving improving Q2 spend and second half of 2023 optimism, data suggesting traction of Spotlight and Creator stories aiding total time spent. On the flip side, negatives could include Q1 revenue results suggesting share loss increasing, a soft April and Q2 outlook suggesting limited benefit from DR solution ramp, and decelerating user/engagement trends. The firm has a Neutral rating on the shares with a price target of $12.

SENTIMENT REMAINS NEGATIVE: Roth MKM kept a Neutral rating and a price target of $11 on Snap ahead of its Q1 results on Thursday. The company has demonstrated progress in AR initiatives and maintained steady user growth, but sentiment toward the stock remains negative due to unclear traction with Direct Response, Spotlight monetization and ongoing engagement mix-shift away from high Average Revenue Per User surfaces such as Stories, the firm told investors in a research note.

WHAT’S NOTABLE: Last week, Bloomberg reported that Snap said at its annual partner summit that it has attracted more than 3M users to the company’s Snapchat+ subscription service. The "growth has exceeded the company's expectations and includes the addition of about a million paying users in the past 11 weeks," Snap said. "We never expected that we could grow to 3 million subscribers," Snap CEO Evan Spiegel is reported to have said in an interview.

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