Snap Stock (NYSE:SNAP)
When a crucial trigger came with Thursday’s investor day presentations, Snap (NYSE:SNAP) slumped 3.5% on Friday (along with several decliners in the Internet content area). The presentations were seen by analysts as demonstrating some improvement in engagement but weak on comforting financials.
Even experts on Wall Street who favor an optimistic outlook reacted to the incident with some circumspection.
The partners at Loop Capital, Rob Sanderson, and Alan Gould observed that “investors, in general, appear to be primarily suspicious.” The Buy recommendation on Loop is accompanied by a price target of $16, which indicates a 54% upside potential.
“In their 2021 analyst day, management addressed head-on their ill-fated estimate of +50% revenue CAGR over many years. Our impression was that management was realistic and balanced, which was a positive sign. Even though macroeconomic circumstances have returned to their previous stable state, the demand environment has not improved, and management did not provide too many projections, “the analysts said.
This last phrase reverberated across the street comments. Citi said that “while the digital advertising landscape has steadied, Snap’s visibility remains restricted overall,” and J.P. Morgan, which has Underweight on Snap stock, said it saw nothing to alter cautious views. “We will continue to seek engagement patterns and mix to stabilize, and we will be looking for revenue to re-accelerate to feel more comfortable.”
Youssef Squali of Truist “walked away from Snap’s Investor Day cautiously hopeful” as the firm “highlighted multiple product and monetization efforts ongoing to reignite growth despite a rising user base, presently standing at 750M+ [monthly active users].” The company is still proceeding with caution, though: “We decide to stay on the sidelines while mgmt navigates current headwinds (macro, iOS changes, competition), and until we start seeing these efforts transfer into ad revenue growth again, which we don’t anticipate before 2H23.”
According to Justin Patterson of KeyBanc, the event demonstrated a significant chance to increase engagement, distinguish using augmented reality, and boost revenue. “Unfortunately, the day did not discuss how rapidly some areas, such as direct response, might grow,” and “financial comments were more qualitative than quantitative.”
The consensus among investors on Wall Street is to maintain a Hold position on Snap stock.
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