[ad_1]
Robert A. Di Ieso Jr.
Text size
The actions of the social media company (and technical shows) Snap were already down in early 2018 when celebrity Kylie Jenner asked if anyone else had stopped. use the Snapchat application because of the much-maligned redesign.
Among Snap's skeptics, Jenner's tweet was a harbinger of an impending destiny for the company – and its stock. Effectively,
Break
(ticker: SNAP), stocks lost about two-thirds of their value at the end of last year. But the news of Snap's death, to paraphrase another well-known American influencer, was greatly exaggerated.
In December, Snap shares hit an all-time low of $ 4.82. Friday, they closed at $ 15.83. They were flat on Tuesday as a rare upgrade helped the stock to avoid broad market losses.
This year, the Snap stock has increased by 186%, outperforming the
S & P 500
as well as social media rivals
Facebook
(FB) and
Twitter
(TWTR). This almost reached Snap with its 2017 IPO price of $ 17 the action.
The return of Snap has several reasons, but the main ones are simple. The redesign problems, which have hindered the use on
Apple
(AAPL) iOS in the short term, have been fixed, while a new launch expected from the Android application has finally landed this spring.
Snapsters applauded: the company added 13 million daily active users in the second quarter, compared with just four million in the first quarter. The number of monthly active users of the company barely exceeds 500 million. In comparison, Twitter has about 335 million users. Of course, Facebook stands out with 2.4 billion.
"The completion of these transitions has laid a solid foundation for the growth of our community, increased engagement and growing demand from advertisers," said CEO Evan Spiegel in July.
Other factors have also helped. While regulations have dropped on Facebook and other big technology companies, for example, Snap has hardly been touched. In the meantime, this review has probably helped to send a portion of the budget for digital advertising.
Product developments, including the launch of in-app games, have had a positive impact and external attention on back-and-forth frames has been reduced. Nevertheless, Wall Street remains largely skeptical.
If Evercore ISI upgraded its action on Tuesday, only nine of the 35 analysts monitored by FactSet have a Buy rating, a small contingent of bulls by Wall Street standards. Thirty-five of the 46 analysts covering Facebook have a Buy or equivalent rating on the stock, according to FactSet. (Twitter's profile seems closer to Snap's.)
This means that analysts essentially missed the Snap rally in 2019. Earlier this year, the average price target for analysts for Snap stocks was just $ 8. Analysts have gradually raised their targets, but just to keep pace with Snap's rise. Today, the average price target is $ 17, less than 10% more than recent prices. At the same time, Wall Street's target price for Facebook suggests a 25% increase.
SunTrust analyst Robinson Humphrey, Youssef Squali, who evaluated Snap at Hold, expressed some lingering reservations about Snap shares in a note released this summer.
"The recent trend of active daily user growth and increased user engagement in product updates and content could give new impetus to financial outperformance," he wrote. But he also warned that product development, marketing and recruitment "could put additional pressure on margins".
The company declined to comment on Wall Street's point of view on the company.
Snap is not expected to release its net profit before 2023, and there is also speculation that Snap's advertising-driven model will not occur in the next downturn. "We would be cautious about negative cash flow companies," like Snap, if that happened, Mark Kelley of Nomura Instinet wrote in August.
Wall Street's consensus annual revenue forecast for Snap of about $ 1.69 billion increased 11 percent this year. This suggests optimism about Snap's business prospects.
But Snap's actions can be valued to reflect the best news. The stock is now trading at about 15 times the level of sales, against 10 times for Twitter and 8 times for Facebook.
In April, MoffettNathanson's analysts compared Snap to a Cinderella tale. The stock was still just $ 12, but the turnaround had begun.
"We think that Snap will continue to work until the story can be refuted," analyst Michael Nathanson wrote. For the moment, the story of Cinderella remains intact.
Send an email to David Marino-Nachison at [email protected]. Follow him to @marinonachison and follow Barron's Next to @barronsnext.
[ad_2]
Source link