{"id":59049,"date":"2023-10-27T06:00:21","date_gmt":"2023-10-27T10:00:21","guid":{"rendered":"https:\/\/www.ino.com\/blog\/?p=59049"},"modified":"2023-10-30T17:11:06","modified_gmt":"2023-10-30T21:11:06","slug":"snap-snap-insider-insights-suggest-a-lucrative-long-term-internet-buy","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2023\/10\/snap-snap-insider-insights-suggest-a-lucrative-long-term-internet-buy\/","title":{"rendered":"Snap (SNAP): Insider Insights Suggest a Lucrative Long-Term Internet Buy"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Shares of<\/span><a href=\"https:\/\/quotes.ino.com\/charting\/?s=NYSE_SNAP\"> <span style=\"font-weight: 400;\">Snap Inc. (SNAP)<\/span><\/a><span style=\"font-weight: 400;\">, the parent company of leading social media platform Snapchat, with a market cap of over $15 billion, witnessed a 12% uptick after an internal memo from CEO Evan Spiegel revealed ambitious forecasts to have over 475 million daily active users (DAUs) in 2024, above the 447 million Wall Street projection. According to the memo, the company foresees more than 20% growth in its advertising revenue for the year 2024. The firm's 2023 objectives also include achieving an adjusted EBITDA of $500 million.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The positive response from investors comes on the heels of an \"<\/span><a href=\"https:\/\/www.reuters.com\/technology\/snap-shares-jump-leaked-2024-user-target-exceed-wall-st-expectations-2023-10-16\/\"><span style=\"font-weight: 400;\">incredibly low<\/span><\/a><span style=\"font-weight: 400;\">\" sentiment period surrounding SNAP's financial future, as SNAP was the first ad-reliant social media company to signal dwindling ad demand amid macroeconomic challenges such as burgeoning inflation rates and intense competition among social media platforms.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">SNAP has endured several financial setbacks in recent years, shedding nearly 80% of its valuation last year while confronting negative top-line growth in the first quarter of 2023. Such figures have prompted genuine concern over the company's long-term viability. With lousy revenue performance and persistent quarterly net losses, it was unclear whether the company could live up to its premium valuation.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Of the nine targets set by SNAP, significant user engagement \u2013 manifested through a 10% increase in the time spent by users consuming content has been its sole accomplishment. However, the encouraging growth forecast has sat well with investors grappling with the company's overall underperformance, straddled by a weak advertising market and stiff competition from AI-based solutions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Though the company confirms SNAP\u2019s revised 20% revenue growth rate and prospective DAU figures as \u201c<\/span><a href=\"https:\/\/www.cnbc.com\/2023\/10\/16\/snap-up-12percent-after-ceo-tells-employees-of-strong-2024-goals.html\"><span style=\"font-weight: 400;\">stretch, internal goals only<\/span><\/a><span style=\"font-weight: 400;\">,\u201d they still offer a promising outlook. Investors would do well not to hinge entirely on these projections, even as they bolster SNAP's growth narrative.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Investors might want to consider the following additional factors:<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">Developments and Mixed Financials<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">SNAP recently posted its third-quarter earnings report. The social media firm's revenue rose 5.3% year-over-year to $1.19 billion, surpassing analysts' expectations. The surge was the first after two consecutive quarters of decline. Although the firm's adjusted income dropped by 75% year-over-year to $0.02 per share, it still marginally surpassed the consensus forecast. As of September 30, 2023, its accumulated deficit stood at $11.29 billion.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Moreover, the company witnessed an 11.8% year-over-year rise in DAUs, reaching 406 million. Since introducing its AI chatbot \"<\/span><a href=\"https:\/\/www.socialmediatoday.com\/news\/snap-begins-testing-sponsored-links-my-ai-chatbot-responses\/694677\/\"><span style=\"font-weight: 400;\">My AI<\/span><\/a><span style=\"font-weight: 400;\">,\" the company reports a substantial engagement of over 200 million people who have exchanged over 20 billion messages.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Snap believes these metrics catapult 'My AI' to join the ranks of some of the most widely utilized AI chatbots today. The company has also launched a new innovative feature powered by Generative AI, 'Dreams.' This addition offers Snapchatters the innovative capability of creating generative AI selfies.<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">Institutional Ownership<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">Several institutions have recently modified their SNAP stock holdings. Institutions hold roughly<\/span><a href=\"https:\/\/www.nasdaq.com\/market-activity\/stocks\/SNAP\/institutional-holdings\"> <span style=\"font-weight: 400;\">51.5% of SNAP shares<\/span><\/a><span style=\"font-weight: 400;\">. Of the 628 institutional holders, 215 have increased their positions in the stock. Moreover, 69 institutions have taken new positions (62,532,200 shares).<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">Price Performance<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">SNAP cleared Wall Street's low bar, but its stock slumped after the report and remains nearly 46% below its IPO price. SNAP\u2019s stock is trading below its 100- and 200-day moving averages, indicating a downtrend.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, Wall Street analysts expect the stock to reach $10.08 in the next 12 months, indicating a potential<\/span><a href=\"https:\/\/www.tipranks.com\/stocks\/SNAP\/forecast\"> <span style=\"font-weight: 400;\">upside of 8.4%.<\/span><\/a><span style=\"font-weight: 400;\"> The price target ranges from a low of $7 to a high of $14.<\/span><\/p>\n<p><b>Bottom Line<\/b><\/p>\n<p><span style=\"font-weight: 400;\">SNAP's bold aspirations for 2024 imply that the company\u2019s visibility may be on the upswing, likely attributable to<\/span><a href=\"https:\/\/www.modernretail.co\/technology\/snap-announces-new-tools-designed-to-get-more-beauty-brands-investing-in-its-ar-experiences\/\"> <span style=\"font-weight: 400;\">advancements in its advertising products<\/span><\/a><span style=\"font-weight: 400;\">. These improvements could signal a pivotal moment for SNAP, potentially heralding the return of solid growth.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">SNAP\u2019s inflated valuation is evident from its forward non-GAAP P\/E and EV\/Sales of 135.63x and 3.44x, 910.3% and 101.4% higher than the industry averages of 13.42x and 1.71x, respectively.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, it is noteworthy that if SNAP\u2019s revenue growth rates exceed 20% and adjusted EBITDA increases to $500 million by year-end 2023, the stock could be highly undervalued.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Looking forward to the remainder of the year, SNAP\u2019s management has recognized halts in spending from many brand-focused ad campaigns following the ongoing Middle East conflict. Because of this, the company<\/span><a href=\"https:\/\/observer.com\/2023\/10\/snap-meta-earnings-israel-question\/\"> <span style=\"font-weight: 400;\">refrains from issuing formal guidance<\/span><\/a><span style=\"font-weight: 400;\"> for the fourth quarter of 2023.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Despite this, internal forecasts predict fourth-quarter revenue between $1.32 billion and $1.375 billion, or a growth of 2% to 6%, implying a continued surge in DAUs to between 410 and 412 million.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Analysts expect its revenue for the fiscal fourth quarter ending December 2023 to increase 4.6% year-over-year to $1.36 billion, while its EPS is expected to decline 63% year-over-year to $0.05.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Due to SNAP\u2019s stretched valuations, mixed financials, and varying analyst estimates, investors should proceed with caution. A more lucid understanding of SNAP\u2019s potential for sustainable growth might be necessary before confident investment decisions can be made. Hence, it could be wise to wait for a better entry point in the stock.<\/span><\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>Shares of Snap Inc. (SNAP), the parent company of leading social media platform Snapchat, with a market cap of over $15 billion, witnessed a 12% uptick after an internal memo from CEO Evan Spiegel revealed ambitious forecasts to have over 475 million daily active users (DAUs) in 2024, above the 447 million Wall Street projection. [&hellip;]<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":41,"featured_media":58726,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[32933,32931,32937,32936,32934,32930,31855,32935,32932],"class_list":["post-59049","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-51-5-of-snap-shares","tag-advancements-in-its-advertising-products","tag-incredibly-low","tag-internal-goals-only","tag-my-ai","tag-refrains-from-issuing-formal-guidance","tag-snap-inc-snap","tag-stretch","tag-upside-of-8-4"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v23.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Snap (SNAP): Insider Insights Suggest a Lucrative Long-Term Internet Buy - INO.com Trader&#039;s Blog<\/title>\n<meta name=\"description\" content=\"Popular social media company Snap Inc. 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