Shares of Snap (SNAP) are in focus on Tuesday following reports that its controversial head of human resources will depart, becoming the latest in a string of senior executives to leave the company.
HALBERT TO DEPART: Jason Halbert, Snap's head of human resources, is leaving the company, Business Insider reported. His resignation comes amid a slew of departures by other senior executives at the company, including Chief Strategy Officer Imran Khan, who left in September and Nick Bell, head of content, who left in November. According to Business Insider, Elizabeth Herbst-Brady exited as head of global strategic partnerships earlier this month. Though Business Insider said the split with Halbert was "amicable," Halbert has been viewed as controversial. According to a reported in December 2017 from The Information, Halbert, who had no prior experience in corporate human resources but is close to Snap CEO Evan Spiegal, interviews with current and former Snap employees said Halbert was "famous for regaling the staff with military stories that range from odd to inappropriate." According to the 2017 report, Halbert's alleged behavior, coupled with aggressive interviewing tactics, had a significant impact on Snap by making it harder for the company to recruit and retain qualified personnel. The Information noted on Monday that since the 2017 report, Halbert stopped reporting directly to Spiegel and moved to two other executives and Snap has "continued to try to professionalize its ranks." Halbert, according to Monday's report, "no longer made sense in the new buttoned down version of Snap."
WHAT'S NOTABLE: The string of executives comes as Snap is dealing with financial losses and layoffs. In March 2018, Snap cut 10% of its engineering team, or just over 100 engineers, which followed three rounds of layoffs a few months prior to that. Additionally, in November 2018, Snap was subpoenaed by the U.S. Justice Department and the Securities and Exchange Commission over the company's initial public offering in 2017. The probe was related to a lawsuit filed by investors who accused Snap of deceiving the public about its competition with Facebook's (FB) Instagram.
ANALYST COMMENTARY: Ahead of the company's fourth quarter results in February, Barclays analyst Ross Sandler said Snap shares may "may start to get a bid" after a disappointing 2018. The stock's setup is similar to Twitter (TWTR) in early 2017, when sentiment went from very negative to "stable with franchise value" and shares tripled in value, Sandler said. If Snap were to deliver on any of the CEO's three "primary lofty goals" for 2019, or achieving breakeven point, accelerating revenue, and growing daily active user growth, the shares could potentially double from current levels, he contended. Separately, on Monday, Citi analyst Mark May upgraded the stock to Neutral and said he expects Snap will soon fully rollout a new version of its app for Android, which could improve user and engagement growth. In addition, the analyst noted that Snap's advertising average revenue per user accelerated in Q3, which bodes well, especially if user growth likewise improves later in 2019.
PRICE ACTION: In early trading, shares of Snap are up 1.3% to $6.39.
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