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Snap Inc. (SNAP) Stock Up 6% as David Tepper Shows Interest
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Snap Inc. (SNAP - Free Report) shares were up over 6% yesterday after David Tepper told CNBC that he purchased shares of the company during its initial public offering. The billionaire hedge fund manager also added that though he sold some shares, he is still interested in buying some if the price comes near its IPO price.
He said he didn’t use Snapchat but believed that the company had the potential to do well, given its popularity among millennials. While talking on Squawk Box on CNBC, he said "My youngest daughter loves the thing. Anybody between 12 and 25 loves it.” It's kind of anti-Facebook in that generation, too."
He further added "I'm a believer in the company. However, when prodded about valuation, Tepper said “It's a valuation question to me. I'm in a nowhere land on valuation here."
Tepper’s revelation had a positive effect on the stock and ended a two-day massacre. Snap started trading on Mar 2, climbing 44% on the first day. However, in the last two days, shares fell below its IPO price amid bearish reports by analysts.
Reportedly, even some investors aren’t happy with the company’s offering of 200 million Class A shares that carry no voting rights. Per a Business Insider report, they have “approached” stock index providers such as S&P Dow Jones Indices and MSCI Inc to prevent Snap and other such companies that offer shares without voting rights from getting incorporated into these benchmark indexes.
Reportedly, most analysts have initiated coverage on Snap with a “sell” rating. Citing instances of Twitter and many others, analysts believe that Snap “will follow a pattern of hot, then cooling, tech IPOs.”
They argue that Snap has already started seeing its average daily user growth rate slowdown. Plus, the company is yet to make profits. Though the company’s revenues are on the rise, losses are ballooning. Per reports, in 2016, Snap’s revenues of $404.5 million were nearly six times higher than 2015 revenues but net loss for the year increased 38% to $514.6 million.
Moreover, since Snapchat has just one source of revenues i.e., advertising, which only began in Oct 2016, it may be a concern for investors. Also, it attracts a particular segment of the demography.
Analysts argue that teens are inclined to sudden changes in preferences. Media reports have quoted Snap “admitting” that increasing competition from big players like Facebook Inc. , which have better resources, is a big threat as they can easily lure users to their platform. Plus, Snap’s valuation is nosebleed. At nearly 60 times its revenues, analysts remain wary as it is too high, given its existing and future growth prospects.
Stocks to Consider
Better-ranked stocks in the wider technology space include Tech Data Corp and Leaf Group Ltd . While Tech Data sports a Zacks Rank #1 (Strong Buy), Leaf Group carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the trailing four quarters, Tech Data and Leaf Group have posted positive average earnings surprises of 7.90% and 27.94%, respectively.
Want to learn more about Snapchat stock? Check out our recent podcast on SNAP with an IPO expert below!
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Snap Inc. (SNAP) Stock Up 6% as David Tepper Shows Interest
Snap Inc. (SNAP - Free Report) shares were up over 6% yesterday after David Tepper told CNBC that he purchased shares of the company during its initial public offering. The billionaire hedge fund manager also added that though he sold some shares, he is still interested in buying some if the price comes near its IPO price.
He said he didn’t use Snapchat but believed that the company had the potential to do well, given its popularity among millennials. While talking on Squawk Box on CNBC, he said "My youngest daughter loves the thing. Anybody between 12 and 25 loves it.” It's kind of anti-Facebook in that generation, too."
He further added "I'm a believer in the company. However, when prodded about valuation, Tepper said “It's a valuation question to me. I'm in a nowhere land on valuation here."
Tepper’s revelation had a positive effect on the stock and ended a two-day massacre. Snap started trading on Mar 2, climbing 44% on the first day. However, in the last two days, shares fell below its IPO price amid bearish reports by analysts.
Reportedly, even some investors aren’t happy with the company’s offering of 200 million Class A shares that carry no voting rights. Per a Business Insider report, they have “approached” stock index providers such as S&P Dow Jones Indices and MSCI Inc to prevent Snap and other such companies that offer shares without voting rights from getting incorporated into these benchmark indexes.
Reportedly, most analysts have initiated coverage on Snap with a “sell” rating. Citing instances of Twitter and many others, analysts believe that Snap “will follow a pattern of hot, then cooling, tech IPOs.”
They argue that Snap has already started seeing its average daily user growth rate slowdown. Plus, the company is yet to make profits. Though the company’s revenues are on the rise, losses are ballooning. Per reports, in 2016, Snap’s revenues of $404.5 million were nearly six times higher than 2015 revenues but net loss for the year increased 38% to $514.6 million.
Moreover, since Snapchat has just one source of revenues i.e., advertising, which only began in Oct 2016, it may be a concern for investors. Also, it attracts a particular segment of the demography.
Analysts argue that teens are inclined to sudden changes in preferences. Media reports have quoted Snap “admitting” that increasing competition from big players like Facebook Inc. , which have better resources, is a big threat as they can easily lure users to their platform. Plus, Snap’s valuation is nosebleed. At nearly 60 times its revenues, analysts remain wary as it is too high, given its existing and future growth prospects.
Stocks to Consider
Better-ranked stocks in the wider technology space include Tech Data Corp and Leaf Group Ltd . While Tech Data sports a Zacks Rank #1 (Strong Buy), Leaf Group carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the trailing four quarters, Tech Data and Leaf Group have posted positive average earnings surprises of 7.90% and 27.94%, respectively.
Want to learn more about Snapchat stock? Check out our recent podcast on SNAP with an IPO expert below!
8 Stocks with Huge Profit Potential Just released:
Driverless Cars: Your Roadmap to Mega-Profits Today. In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>