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Snap Inc. (SNAP - Free Report) ’s stock price is hovering around its highest level in over a year following a bullish report from Wells Fargo analysts initiated in early December, as quoted on CNBC. Overall, SNAP gained 6.9% last week. Snap's stock has surged by nearly 44% past month and 91% year-to-date. The Wells Fargo analysts attributed this impressive performance to Snap's strategic changes in product development and leadership.
Analyst Upgrade and Price Target Increase
The analysts at Wells Fargo upgraded Snap's stock from "equal weight" to "overweight" and raised their price target from $8 to $22. At the close of the market on Monday, Snap was trading at around $15.75, marking its highest price since July 2022. According to the analysts, the social media company's advertising performance has shown positive momentum for the first time since April 2021, as indicated in a note published on Dec 10.
Improved Competitive Position in Advertising
The analysts also noted that recent changes implemented by Snap have significantly narrowed the gap in its ad product offerings compared to other audience platforms. They wrote, "We believe changes made over the past several months have meaningfully narrowed Snap’s ad product gap relative to other audience platforms."
Impact of Recent Changes
Snap has made strategic hires from industry rivals Google and Meta to help revamp its ad business, which the analysts highlighted in their note. They expressed confidence that these changes will contribute to strengthening Snap's financial performance, stating, "We see meaningful gross margin improvement in 2024 and beyond," and they forecast a 65% gross margin by 2027.
Earnings Report Boost
The surge in Snap's stock price follows the release of the company's third-quarter earnings report in October, which temporarily drove shares up by as much as 20%. CEO Evan Spiegel attributed the positive performance to the company's cost-cutting measures and "positive growth." Snap reported $1.19 billion in revenue, surpassing Wall Street's estimates of $1.11 billion, according to LSEG (formerly known as Refinitiv).
Future Focus on Advertising Platform
Spiegel emphasized Snap's commitment to enhancing its advertising platform to provide higher returns on investment for its advertising partners. The company has also evolved its go-to-market efforts to better support partners and achieve customer success, as outlined in the earnings report.
Earnings Estimate Revision
One out of six analysts boosted the earnings estimate for the next quarter in the past one month. Most Accurate Estimate for March quarter earnings is now a loss of a penny, marking a 62.50% improvement from Zacks Consensus Estimate. Notably, SNAP has witnessed an average four-quarter earnings surprise of 110%.
Time for Snap-Heavy ETFs?
Against this backdrop, below we highlight a few ETFs that are heavy on Snap.
Global X Social Media ETF (SOCL - Free Report) – Snap has 7.37% weight
(Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.)
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Time for Snap-Heavy ETFs?
Snap Inc. (SNAP - Free Report) ’s stock price is hovering around its highest level in over a year following a bullish report from Wells Fargo analysts initiated in early December, as quoted on CNBC. Overall, SNAP gained 6.9% last week. Snap's stock has surged by nearly 44% past month and 91% year-to-date. The Wells Fargo analysts attributed this impressive performance to Snap's strategic changes in product development and leadership.
Analyst Upgrade and Price Target Increase
The analysts at Wells Fargo upgraded Snap's stock from "equal weight" to "overweight" and raised their price target from $8 to $22. At the close of the market on Monday, Snap was trading at around $15.75, marking its highest price since July 2022. According to the analysts, the social media company's advertising performance has shown positive momentum for the first time since April 2021, as indicated in a note published on Dec 10.
Improved Competitive Position in Advertising
The analysts also noted that recent changes implemented by Snap have significantly narrowed the gap in its ad product offerings compared to other audience platforms. They wrote, "We believe changes made over the past several months have meaningfully narrowed Snap’s ad product gap relative to other audience platforms."
Impact of Recent Changes
Snap has made strategic hires from industry rivals Google and Meta to help revamp its ad business, which the analysts highlighted in their note. They expressed confidence that these changes will contribute to strengthening Snap's financial performance, stating, "We see meaningful gross margin improvement in 2024 and beyond," and they forecast a 65% gross margin by 2027.
Earnings Report Boost
The surge in Snap's stock price follows the release of the company's third-quarter earnings report in October, which temporarily drove shares up by as much as 20%. CEO Evan Spiegel attributed the positive performance to the company's cost-cutting measures and "positive growth." Snap reported $1.19 billion in revenue, surpassing Wall Street's estimates of $1.11 billion, according to LSEG (formerly known as Refinitiv).
Future Focus on Advertising Platform
Spiegel emphasized Snap's commitment to enhancing its advertising platform to provide higher returns on investment for its advertising partners. The company has also evolved its go-to-market efforts to better support partners and achieve customer success, as outlined in the earnings report.
Earnings Estimate Revision
One out of six analysts boosted the earnings estimate for the next quarter in the past one month. Most Accurate Estimate for March quarter earnings is now a loss of a penny, marking a 62.50% improvement from Zacks Consensus Estimate. Notably, SNAP has witnessed an average four-quarter earnings surprise of 110%.
Time for Snap-Heavy ETFs?
Against this backdrop, below we highlight a few ETFs that are heavy on Snap.
Global X Social Media ETF (SOCL - Free Report) – Snap has 7.37% weight
Fidelity Disruptive Communications ETF (FDCF - Free Report) – Snap has 7.16% weight
ProShares On-Demand ETF (OND - Free Report) – Snap has 6.81% weight
Global X Metaverse ETF – Snap has 5.93% weight
SPDR S&P Internet ETF – Snap has 5.84% weight
(Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.)