Analysts will be on the look out for some positive news from Snap this week as the company reports third quarter earnings, with user engagement and advertising revenue growth set to go under the microscope.
The Silicon Valley tech firm and maker of messaging app Snapchat has floundered since its float on the New York Stock Exchange in March. Shares reached as high as $29 following the initial public offering, but in recent weeks they have traded at around $15.
"Once again, there's a lot riding on what Snapchat reports this quarter," said Debra Aho Williamson, principal analyst at eMarketer.
"User engagement and ad revenue growth are still two big areas of concern, so we’ll be watching for signs of positive trends there," she said.
According to eMarketer data, Snapchat is expected to generate $774m in global advertising revenue this year, up 127.5 per cent compared with the previous year. Meanwhile, monthly US users are expected to rise to 79.2m this year, up 25.8 per cent, while UK usage is forecast to rise 20.2 per cent to 14m.
Williamson said another area to watch will be the rollout of new video shows. Snap announced last month it was partnering with US media giant NBCUniversal to make scripted shows for Snapchat. Snap had previously made TV-style news, reality and comedy shorts with US TV networks based on existing shows.
Snap also recently announced new features for Snapchat called context cards to provide information about locations, opening up a new potential stream of revenue.
Analysts have scrutinised Snap's rivalry with Facebook, which launched Snapchat-like features on its Instagram app following a failed bid for the company in 2013.
However, Williamson noted one positive: Snapchat has managed to avoid the Russia advertising investigation that has engulfed Facebook, Twitter and YouTube in recent weeks.
"That’s good news, but it’s unclear if the investigation has caused advertisers to shift ad dollars away from those properties and toward Snapchat," she added.
Snap will report third-quarter earnings on Tuesday, 7 November.