Snap Gains Over 25% - What's Going On?
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Apr 26 2024
0mins
Should l Buy SNAP?
- Snap Inc. Financial Performance: Snap Inc. shares surged in premarket trading following the company's first-quarter financial results, which included earnings of 3 cents per share, beating estimates.
- Key Financial Metrics: Adjusted EBITDA for Snap was $46 million, a significant increase from the previous year, and quarterly sales reached $1.195 billion, surpassing analyst expectations by 6.74%.
- New Tools and Features: Snap highlighted new tools like Creative Templates, longer video posts, and AI-powered AR Lens creation to enhance user experience.
- User Growth and Engagement: The company reported an increase in daily active users to 422 million, up 10% year-over-year, with growth attributed to onboarding over 1,500 Snap Stars.
- Future Outlook: Snap anticipates further growth in the second quarter, projecting revenues between $1.225 billion and $1.255 billion based on an estimated DAU of approximately 431 million.
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Analyst Views on SNAP
Wall Street analysts forecast SNAP stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for SNAP is 9.57 USD with a low forecast of 7.00 USD and a high forecast of 13.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
28 Analyst Rating
2 Buy
24 Hold
2 Sell
Hold
Current: 4.990
Low
7.00
Averages
9.57
High
13.00
Current: 4.990
Low
7.00
Averages
9.57
High
13.00
About SNAP
Snap Inc. is a technology company. Its flagship product, Snapchat, is a visual messaging application that enhances relationships with friends, family, and the world. Snapchat is the Company's core mobile device application and contains five tabs, complemented by additional tools that function outside the application. Snapchatters can interact with any or all the five tabs. Additionally, it offers Snapchat+, its subscription product that provides subscribers access to exclusive, experimental, and pre-release features. Snapchat+ offers a range of features, from allowing Snapchatters to customize the look and feel of their application, to giving special insights into their friendships. The Company also offers Snapchat for Web, a browser-based product that brings Snapchats calling and messaging capabilities to the Web. Its advertising products include AR Ads and Snap Ads. Snap Ads include Single Image or Video Ads, Story Ads, Collection Ads, Dynamic Ads, Commercials, and Sponsored Snaps.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Snap Shares Hit All-Time Low as Citi Lowers Price Target
- All-Time Low Stock Price: Snap Inc (SNAP) shares hit an all-time intraday low of $4.72 on Thursday, reflecting market concerns about the company's future performance, particularly after Citi lowered its price target from $10 to $6 while maintaining a ‘Neutral’ rating, indicating analysts' caution regarding ongoing brand advertising headwinds.
- Q4 Earnings Beat Expectations: Although Snap reported a 10% year-over-year revenue increase to $1.72 billion in Q4, surpassing analysts' expectations of $1.70 billion, its Q1 revenue guidance of $1.5 billion to $1.53 billion falls short of the $1.55 billion analysts projected, highlighting uncertainty in the company's future growth trajectory.
- Increased Legal Risks: Texas Attorney General Ken Paxton has filed a lawsuit against Snap, alleging the company failed to adequately warn parents and consumers about inappropriate content on its app, which could lead to civil penalties and a permanent injunction if successful, further intensifying market concerns about Snap's operational risks.
- Investor Sentiment Fluctuations: Despite the stock's decline, retail investor sentiment on Stocktwits remains in the ‘extremely bullish’ territory, with some users expressing disappointment over the stock's performance while others are optimistic about the potential of the Perplexity partnership to drive the stock price up to $20, indicating a divergence in market outlook.
See More
Analysis of Covered Call Options for SNAP Stock
- Covered Call Returns: By purchasing SNAP stock at $4.92 per share and selling a covered call at a $6.00 strike price, investors could achieve a total return of 23.98% if the stock is called away at expiration on April 2, indicating an attractive strategy under current market conditions.
- Expiration Risk: The $6.00 strike price represents a 22% premium over the current trading price, suggesting that the option may expire worthless, allowing investors to retain both their shares and the premium collected, with a current probability of 57% for this scenario, highlighting potential risk management benefits.
- Additional Return Potential: Should the covered call expire worthless, investors would gain a 2.03% boost in returns, annualized at 15.15%, indicating that even without selling the stock, investors can still achieve significant returns through this options strategy.
- Volatility Analysis: The implied volatility of the call option stands at 62%, while the actual trailing twelve-month volatility is calculated at 59%, suggesting a high market expectation for future price fluctuations of SNAP stock, prompting investors to monitor market dynamics for optimal investment decisions.
See More
Sunbit Appoints New CMO to Drive Growth
- Executive Appointment: Sunbit has appointed Shachar G. Scott as Chief Marketing Officer, bringing over 25 years of global brand-building experience from companies like Meta and Apple, marking a pivotal moment for the company's expansion into new products and markets.
- Market Expansion: Scott will lead Sunbit's global marketing efforts, focusing on brand, product marketing, and customer communications, aiming to enhance market awareness and deepen customer relationships to support the company's ongoing growth in financial services.
- Financial Strength: Sunbit boasts a funding capacity of $1.4 billion from blue-chip partners such as J.P. Morgan and Citi, having served 5.3 million loan customers, showcasing its strong market position and growth potential in the fintech sector.
- Innovative Services: By offering no-fee credit cards and buy now, pay later solutions, Sunbit aims to make financial services more human and transparent, helping consumers manage their life expenses more easily, thereby reinforcing its competitive advantage in the market.
See More
Instagram Head Testifies on Social Media Usage Issues
- Social Media Usage Issues: Instagram head Adam Mosseri testified in Los Angeles that while social media usage can be problematic, he does not consider it an addiction, highlighting the distinction between clinical addiction and problematic use, which reflects the company's concern for user mental health.
- Legal Case Context: The plaintiff alleges that Meta, YouTube, TikTok, and Snap intentionally designed features that negatively impacted young users' mental health, with the jury determining whether Instagram was a substantial factor in the plaintiff's struggles, indicating the legal risks faced by social media platforms.
- Digital Filter Controversy: Mosseri discussed the company's debate over banning digital filters that could lead to mental health issues, ultimately deciding against allowing effects that promote plastic surgery, demonstrating the company's balancing act between cultural relevance and business interests.
- Minor Protection Stance: Mosseri stated that protecting minors is a priority for the company, acknowledging that while profit considerations may influence business decisions, he believes that long-term protection of minors is beneficial for the company, reflecting the complex balance between social responsibility and profitability.
See More
Instagram CEO Testifies on Social Media Usage and Mental Health
- Social Media Usage Issues: Instagram CEO Adam Mosseri testified in Los Angeles that while social media use can be problematic, he does not consider it an addiction, emphasizing the importance of personal feelings in usage frequency, which has sparked widespread public discussion about social media's impact.
- Legal Case Context: The case involves a plaintiff and her mother alleging that features designed by Meta and others have led to mental health issues in teenagers, although Meta argues that the plaintiff faced significant challenges before using social media, highlighting the complexity of legal responsibility.
- Digital Filter Controversy: In court, Mosseri mentioned the company's discussions on whether to ban digital filters that could encourage plastic surgery, ultimately deciding against such effects, reflecting the company's balancing act between cultural relevance and business competitiveness.
- Transparent Decision-Making: Mosseri revealed email exchanges with Meta executives regarding the policy on digital filters, indicating his decision-making process; despite risks, he preferred an option that minimized user experience impact, underscoring the delicate balance between protecting minors and business interests.
See More
Snapchat Faces Lawsuit from Texas AG Over Safety Claims
- Legal Action Intensifies: Texas Attorney General Ken Paxton has filed a lawsuit against Snap Inc., alleging the company failed to adequately warn parents and consumers about inappropriate content on its app, highlighting significant shortcomings in user safety.
- False Safety Claims: The lawsuit claims that Snapchat knowingly misrepresented its app as safe for children aged 12 and up, while its addictive design poses potential psychological harm to minors, raising serious ethical concerns.
- Negative Market Reaction: Following the lawsuit announcement, SNAP shares fell nearly 4%, indicating investor concerns over the company's legal risks and potential financial repercussions, which could adversely affect future market performance.
- Increased Regulatory Pressure: This lawsuit represents not only a direct challenge to Snapchat but also reflects the growing scrutiny of the social media industry, potentially prompting other platforms to reassess their content management and user safety strategies.
See More
Snap Shares Hit All-Time Low as Citi Lowers Price Target
- All-Time Low Stock Price: Snap Inc (SNAP) shares hit an all-time intraday low of $4.72 on Thursday, reflecting market concerns about the company's future performance, particularly after Citi lowered its price target from $10 to $6 while maintaining a ‘Neutral’ rating, indicating analysts' caution regarding ongoing brand advertising headwinds.
- Q4 Earnings Beat Expectations: Although Snap reported a 10% year-over-year revenue increase to $1.72 billion in Q4, surpassing analysts' expectations of $1.70 billion, its Q1 revenue guidance of $1.5 billion to $1.53 billion falls short of the $1.55 billion analysts projected, highlighting uncertainty in the company's future growth trajectory.
- Increased Legal Risks: Texas Attorney General Ken Paxton has filed a lawsuit against Snap, alleging the company failed to adequately warn parents and consumers about inappropriate content on its app, which could lead to civil penalties and a permanent injunction if successful, further intensifying market concerns about Snap's operational risks.
- Investor Sentiment Fluctuations: Despite the stock's decline, retail investor sentiment on Stocktwits remains in the ‘extremely bullish’ territory, with some users expressing disappointment over the stock's performance while others are optimistic about the potential of the Perplexity partnership to drive the stock price up to $20, indicating a divergence in market outlook.
See More
Analysis of Covered Call Options for SNAP Stock
- Covered Call Returns: By purchasing SNAP stock at $4.92 per share and selling a covered call at a $6.00 strike price, investors could achieve a total return of 23.98% if the stock is called away at expiration on April 2, indicating an attractive strategy under current market conditions.
- Expiration Risk: The $6.00 strike price represents a 22% premium over the current trading price, suggesting that the option may expire worthless, allowing investors to retain both their shares and the premium collected, with a current probability of 57% for this scenario, highlighting potential risk management benefits.
- Additional Return Potential: Should the covered call expire worthless, investors would gain a 2.03% boost in returns, annualized at 15.15%, indicating that even without selling the stock, investors can still achieve significant returns through this options strategy.
- Volatility Analysis: The implied volatility of the call option stands at 62%, while the actual trailing twelve-month volatility is calculated at 59%, suggesting a high market expectation for future price fluctuations of SNAP stock, prompting investors to monitor market dynamics for optimal investment decisions.
See More
Sunbit Appoints New CMO to Drive Growth
- Executive Appointment: Sunbit has appointed Shachar G. Scott as Chief Marketing Officer, bringing over 25 years of global brand-building experience from companies like Meta and Apple, marking a pivotal moment for the company's expansion into new products and markets.
- Market Expansion: Scott will lead Sunbit's global marketing efforts, focusing on brand, product marketing, and customer communications, aiming to enhance market awareness and deepen customer relationships to support the company's ongoing growth in financial services.
- Financial Strength: Sunbit boasts a funding capacity of $1.4 billion from blue-chip partners such as J.P. Morgan and Citi, having served 5.3 million loan customers, showcasing its strong market position and growth potential in the fintech sector.
- Innovative Services: By offering no-fee credit cards and buy now, pay later solutions, Sunbit aims to make financial services more human and transparent, helping consumers manage their life expenses more easily, thereby reinforcing its competitive advantage in the market.
See More
Instagram Head Testifies on Social Media Usage Issues
- Social Media Usage Issues: Instagram head Adam Mosseri testified in Los Angeles that while social media usage can be problematic, he does not consider it an addiction, highlighting the distinction between clinical addiction and problematic use, which reflects the company's concern for user mental health.
- Legal Case Context: The plaintiff alleges that Meta, YouTube, TikTok, and Snap intentionally designed features that negatively impacted young users' mental health, with the jury determining whether Instagram was a substantial factor in the plaintiff's struggles, indicating the legal risks faced by social media platforms.
- Digital Filter Controversy: Mosseri discussed the company's debate over banning digital filters that could lead to mental health issues, ultimately deciding against allowing effects that promote plastic surgery, demonstrating the company's balancing act between cultural relevance and business interests.
- Minor Protection Stance: Mosseri stated that protecting minors is a priority for the company, acknowledging that while profit considerations may influence business decisions, he believes that long-term protection of minors is beneficial for the company, reflecting the complex balance between social responsibility and profitability.
See More
Instagram CEO Testifies on Social Media Usage and Mental Health
- Social Media Usage Issues: Instagram CEO Adam Mosseri testified in Los Angeles that while social media use can be problematic, he does not consider it an addiction, emphasizing the importance of personal feelings in usage frequency, which has sparked widespread public discussion about social media's impact.
- Legal Case Context: The case involves a plaintiff and her mother alleging that features designed by Meta and others have led to mental health issues in teenagers, although Meta argues that the plaintiff faced significant challenges before using social media, highlighting the complexity of legal responsibility.
- Digital Filter Controversy: In court, Mosseri mentioned the company's discussions on whether to ban digital filters that could encourage plastic surgery, ultimately deciding against such effects, reflecting the company's balancing act between cultural relevance and business competitiveness.
- Transparent Decision-Making: Mosseri revealed email exchanges with Meta executives regarding the policy on digital filters, indicating his decision-making process; despite risks, he preferred an option that minimized user experience impact, underscoring the delicate balance between protecting minors and business interests.
See More
Snapchat Faces Lawsuit from Texas AG Over Safety Claims
- Legal Action Intensifies: Texas Attorney General Ken Paxton has filed a lawsuit against Snap Inc., alleging the company failed to adequately warn parents and consumers about inappropriate content on its app, highlighting significant shortcomings in user safety.
- False Safety Claims: The lawsuit claims that Snapchat knowingly misrepresented its app as safe for children aged 12 and up, while its addictive design poses potential psychological harm to minors, raising serious ethical concerns.
- Negative Market Reaction: Following the lawsuit announcement, SNAP shares fell nearly 4%, indicating investor concerns over the company's legal risks and potential financial repercussions, which could adversely affect future market performance.
- Increased Regulatory Pressure: This lawsuit represents not only a direct challenge to Snapchat but also reflects the growing scrutiny of the social media industry, potentially prompting other platforms to reassess their content management and user safety strategies.
See More
