HomeInvesting NewsThe Reason Why Snap Inc. Stock Rose Today

The Reason Why Snap Inc. Stock Rose Today

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Snap (NYSE:SNAP)

After a note from Snap CEO Evan Spiegel was leaked to the public on Thursday, the stock price of Snap (NYSE:SNAP) jumped. As of 11:15 AM EST, Snap stock had risen by 10% due to the memo’s positive reception among analysts. Today at ET.

What’s the Reason?

Spiegel reportedly presented a strategy to Snap (NYSE:SNAP) staff on Wednesday, aiming for $6 billion in sales in 2023 and more than $1 billion in free cash flow, as reported by The Verge, a technology news website (FCF). As of the second quarter of 2022, the firm had generated just over $4.5 billion in trailing 12-month sales and $172 million in accumulated FCF.

In other words, Spiegel expects significant growth over the next 16 months, which has caught the attention of Wall Street. For instance, The Fly reports that UBS analyst Lloyd Walmsley and Bank of America analyst Justin Post both see Snap shares favorably in light of this disclosed document.

Year-to-date, Snap (NYSE:SNAP) shares have fallen 74%. And part of the cause is the commercial downturn brought on by the economy, which has led to layoffs and the abandonment of projects. Since the company’s recent disappointing performance, Spiegel’s optimistic tone and projections have come as a pleasant surprise to the market. Furthermore, this is the reason why Snap’s stock price is rising today.

What’s Next?

As a Snap (NYSE:SNAP) investor, I would take the contents of Spiegel’s allegedly leaked memo with a large helping of salt. On the one hand, it’s encouraging to see the firm continuing to fight through tough times. A market value of roughly $20 billion would seem acceptable for the stock if it achieved $1 billion in FCF in 2023.

Despite the present macroeconomic context, Snap (NYSE:SNAP) has solid revenue and FCF objectives. Spiegel claims that unexpected events “punched the corporation in the face hard.” Therefore, it’s reasonable to question whether or not its 2023 objectives adequately account for all that may conceivably occur in the following year or if it will be struck in the face again.

Until Snap (NYSE:SNAP) makes more headway toward its new objectives, it may be prudent to reserve judgment.

Featured Image – Megapixl © Cpenler

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