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Snap stock extends rally as CEO calls ‘huge’ opportunity

Shares of Snap Inc. were heading for another session of strong gains on Thursday following Chief Executive Evan Spiegel’s presentation at a conference as well as upbeat comments from analysts about the social media company’s internal targets. and the state of the advertising market.

SNAP sharing,
rose 8.5% in Thursday afternoon trading, after rising 6.4% in Wednesday’s session.

Spiegel spoke Wednesday night at Vox’s Code conference, offering a candid view of Snap’s challenges, but also discussing what he sees as a big opportunity ahead of the company, which has seen its shares drop 74% so far in 2022.

“I think we’re a long way from reaching our full potential,” Spiegel said during the presentation, according to a recap from The Wall Street Journal.

A Variety recap cited more positive comments about the company’s future.

“Personally, where I sit today and look at the long-term opportunity in our business, I truly believe it’s huge,” Spiegel said, according to this report.

At the same time, Spiegel was candid about the current state of the market, according to The Wall Street Journal.

“We don’t see a lot of things that make us optimistic and so what we’ve had to do is really restructure our business,” Spiegel said. Snap recently revealed it would be cutting 20% ​​of jobs as it seeks to give the company a clearer focus.

See more: Snap confirms massive job cuts and reveals unexpected sales growth

Snap shares closed higher on Wednesday after The Verge published a memo from chief executive Evan Spiegel, who told employees he was looking to grow the company’s user count by 30% by the end of the month. end of 2023.

It’s also targeting $6 billion in revenue by the end of next year, of which $350 million could come from the company’s paid Snapchat+ subscription service that lets users personalize their app experiences. among others.

Read: Snap just hit a big milestone as it looks to move beyond ad revenue

A Snap spokesperson declined to comment on the memo.

KeyBanc Capital Markets analyst Justin Patterson said late Wednesday that he “would need to see more meaningful signs of revenue and audience growth to consider $6 billion in revenue targets,” as well. than more than $1.5 billion in adjusted earnings before interest, taxes, amortization. , and amortization (Ebitda), an objective also stated in the note.

That said, Patterson felt a bit more optimistic about Snap’s story as he raised his revenue expectations for 2022, 2023, and 2024. His estimate for 2023 is now $5.6 billion, below of Snap’s lens.

“We believe the back-to-school season has gone better than expected and that a more supportive supply environment is providing some relief to retail and e-commerce advertisers heading into Q4,” it said. -he writes.

Patterson said he viewed the numbers in Spiegel’s memo more as an “internal goal versus formal guidelines.”

Lloyd Walmsley of UBS seemed more optimistic, writing that he was “encouraged” to see what Spiegel described in the note.

“We recognize this could be an internal stretch goal and the co is in show-me mode given the macro uncertainty,” Walmsley wrote. “Nevertheless, we think the co did a good job of executing, showing DAU [daily active user] a growth of 85% since 2018 to date and a turnover multiplied by 3 from 2018 to 22 E. »

He added that he was ready to give Snap’s management team “the benefit of the doubt” despite the economic uncertainty.

Snap stock has lost 18.1% over the past three months, while the S&P 500 SPX index,
fell 3.0%.

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