Home Stock Snap investors can still 'dream' as earnings show major growth paths are...

Snap investors can still ‘dream’ as earnings show major growth paths are still ahead.


Snap Inc. showed continued revenue and user motivation in its latest report, fueling optimism about the company’s long-term opportunities and the stock’s “investment potential”.

Shares of Snap Inc.
SNAP,
+ 7.45%

9% gain in trading Friday morning after social media topped expectations for revenue and concurrent user growth Unexpected break-even performance on adjusted earnings.

MoffettNathanson analyst Michael Nathanson writes after the report: “We’ve never seen a company grow + 66% revenue in a quarter and identify the factors that show the best is yet to come.

It’s not particularly new to suggest that Snap could benefit in the current quarter from an easy comparison to a year ago that saw a plague-induced ad decline. And it’s not the only one to expect that companies can capitalize on the increase in ad spend as sluggish categories like travel and entertainment begin their marketing efforts as the economy recovers. . But Nathanson is also excited about Snap’s unique elements and its product traction.

“In fact, as Snap’s user base begins to re-engage in the real world, there will likely be an increase in Snap’s monetized inventory as with all impressions. The indoor linearity begins to fall, ”he wrote, reiterating the $ 80 Buy rating and Price target. Product innovation efforts and make money, continuous new shows [daily-active-user] growth and higher [average revenue per user]. “

Wells Fargo analyst Brian Fitzgerald wrote that Snap still faces the risk of Apple Inc. changes.
AAPL,
+ 1.80%

is working on its ad targeting capabilities, which could affect Snap’s second-quarter outlook, which he says is “cautious”.

However, he remains optimistic about the company’s potential, pointing to positive signs such as Snap’s disclosure that its Android user base is now larger than its iOS user base. A few years ago, Snap’s lackluster Android app held back user growth and was a major source of interest for investors, but Snap has since improved that experience in a way that appears to be paying off. answer.

Android is an operating system run by Alphabet, the parent company of Google.
GOOGL,
+ 2.10%
,
while iOS is the operating system used in Apple’s iPhone

Fitzgerald also fostered other dynamics: “We remain optimistic with strong usage / interaction trends and a rich runway monetization across multiple dimensions (increased ad relevance, new format, increase [augmented reality] adoption, increasing market share of e-commerce and game activity on the platform, while narrowing the domestic / international monetization gap). “

He has an excess rating and a price target of $ 91 per share.

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Bernstein’s Mark Shmulik cheered for the company’s financial progress in a note titled “This is for super” as he reiterated a better rating and a $ 80 price target.

“One for value investors, Snap has delivered [positive free-cash flow] for the first time in its history to lead by improving cost efficiency in infrastructure and cash conversion cycle, ”he wrote in a note to clients.

Snap shares are up 287 percent in the past 12 months compared with a 48 percent gain in the S&P 500
SPX,
+ 1.09%
,
But Shmulik still sees an opportunity for stocks to move higher.

“We believe in user endurance and revenue growth over the next few years as international expansion and new features drive increased engagement while product innovation improves, The growing advertiser bureau and options around e-commerce and licensing still provide opportunities for investors to dream, ”he wrote.

Monness, Crespi, Hardt & Co. Analyst Brian White had a more metrological perspective. “While Snap has improved business execution, introduced new, promising innovations, and enhanced its ad technology platform to capitalize on an improved digital ad spend environment. But the pricing is not for the faint of heart, ”he said in a research note while maintaining a neutral rating.

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