Key points:
- Snap stock falls further, dropping 17% following Facebook earnings
- KeyBlanc analyst slashes price target from $85 to $36 on ad measurement difficulties
- Stifel analyst still sees an upside for the company through possible monetization routes
In Snap's (NYSE: SNAP) most recent earnings report; the company highlighted various headwinds that collectively pose a threat to increasing growth. The company is becoming more exposed to competition from rising rival TikTok, and changes to Apple’s data agreements mean that Snap is finding it hard to maximize revenue from targetted advertising. Today, following missed earnings from Facebook, Snap stock has plummeted a further 17% premarket with growing concerns regarding headwinds to monetization.
Snap has been in focus from various analysts recently; with mixed outlooks. Today, KeyBlanc analyst Justin Patterson lowered the firm’s price target to $36 from $85 – a wide cut – but still maintains an Overweight rating on the shares. The cut, unsurprisingly, was a result of disappointment in Facebook’s earnings; shining a wider light on ad measurement difficulties. Patterson also refers to margin pressure from investment but concludes that as ‘valuation multiples have swung considerably’ – there is room for results to be better than anticipated.
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On the flip side, Stifel analyst Mark Kelley resumed coverage of Snap with a Buy and a $45 price target. Despite the headwinds weighing on sentiment, Kelley has faith in the platform, proved by its resiliency throughout the pandemic. More interestingly, the Stifel analyst makes particular reference to the company’s pipeline of under-monetized and yet-to-be-monetized products; resulting in the potential for a ‘significant upside’
All in all, it’s a bit of a mixed bag for Snap. Facebook’s mixed earnings have definitely boosted worries regarding advertising headwinds, but should Snap focus on increasing monetization across different avenues; then there is still long-term potential for the currently heavily-sold stock.