It has been a rocky road for
stock, but a research firm found plenty of positives about the parent company of social media platform
ahead of its earnings release Thursday.
A team of analysts from LightShed Partners detailed the company’s stumbles—including ad-targeting struggles, grappling with advertising competitor TikTok, and leadership challenges—but said recent mistakes are salvageable, given its dependable and growing user base.
The analysts believe first quarter will be the trough for SNAP revenue growth, with improvement throughout 2023 into 2024. They gave the stock a new price target of $19 in a report Wednesday, along with a list of reasons to buy it. The previous target was $84, set in the middle of 2021, when shares were trading at $64, Richard Greenfield, one of the note’s writers, said in an email to Barron’s.
On Wednesday afternoon, shares of Snap had dipped 2.3% to $9.93. Over the last 12 months, the stock has tumbled nearly 63%.
Of the analysts surveyed by FactSet, 7% rated it Sell, 78% rated it Hold, and 15% rated it Buy as of April 23.
After market close Thursday, Snap is expected to report a first-quarter net loss of $358 million, or 23 cents a share, according to FactSet, wider than the $288 million net loss, or 18 cents a share, recorded the prior quarter.
Despite the challenges, analysts from LightShed Partners see a brighter road ahead. They said advertisements on Snapchat will start to feel more like content, moving away from generic ads that line webpages, leading to an uptick in engagement.
Along a similar line, the company has dipped its toes into the AI pool, launching a bot for its Snap+ subscribers earlier this year—which it recently announced is expanding to all users. The analysts said that clears a path for Snap to start collecting data, leading it to potentially create real financial value out of time spent in chat, which it hasn’t been able to do so far.
Beyond that, they said the company has a unified content feed in the works, which would simplify the user experience, gathering all content in one place.
“Snap is simply too much work today, especially versus peer platforms,” they wrote. “We believe this could be a meaningful unlock to time spent and enable Snap to become more of an entertainment destination.”
Other positives for the stock include monetizing different experiences on the app, via its creators and through Spotlight, a space for users to share content publicly, making strides in ad-targeting and expanding its Snap+ subscription business.
Write to Emily Dattilo at [email protected]
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