Can Snap Emerge From Facebook Shadow? Some Say It Can Be Done

This is source I found from another site, main source you can find in last paragraph

As Snapchat-operator

Snap (SNAP) presented quarterly results this week that missed estimates on all the key metrics, company executives still put a positive spin on its future despite a dramatic stock-price drop.

XAutoplay: On | Off"We believe deeply in the long-term success of Snap," said Evan Spiegel, Snap co-founder and chief executive, in the conference call following second-quarter results posted after the market close Thursday.

Is Spiegel alone in his assessment? There are some on Wall Street who would indicate otherwise.

"Near-term issues hang on the stock, but we believe patient investors should look through the noise at the long-term opportunity," Jefferies analyst Brian Fitzgerald wrote in a note to clients. He maintained a buy rating but cut his price target on shares to 16 from 30. Looking long-term, Fitzgerald said, Snapchat engagement is growing and Snap is serving a large market that is underserved.

"Snap's opportunity to be the third largest player in mobile advertising, behind

Alphabet (GOOGL) and Facebook, remains intact" as advertisers yearn for a third independent player, he wrote.

Credit Suisse analyst Stephen Ju wrote that Snapchat is a scarce asset that offers advertisers access to a coveted demographic: millennials. He maintained an outperform rating on Snap but cut his price target to 17 from 25. Meanwhile, Drexel Hamilton analyst Brian White maintained a buy rating on Snap and a price target of 30.

"The never-ending, doomsday narrative around Facebook's perceived impact on Snapchat remained a theme lurking in the background during the call," White wrote in his note to clients. "That said, we continue to believe that Snap can monetize its unique position with millennials. Snap's strong millennial following and innovative product offering have the potential to drive high levels of user engagement, resulting in much higher levels of advertising spending."

Snap CEO Spiegel spoke optimistically about the company's progress in boosting the amount of money it derives from users of the mobile app, and its numerous new products and advertising growth. But it wasn't enough to halt the stock from crashing and hitting a new low on Friday.

Snap plunged another 14% to close at 11.83 on the stock market today, close to the new record low of 11.81 set earlier in the session. Snap shares have sunk since its initial public offering four months ago that priced shares at 17. It hit a record high of 29.44 the following day but has gone downhill ever since.

Snap said second-quarter revenue rose 153% to $181.7 million, as it posted another loss at 16 cents a share, with both revenue and earnings missing the consensus estimate of analysts. Snap added 7 million new users, missing views of 10 million and raising its total number of daily active users to 173 million. That compares with 250 million people using Instagram Stories, a feature inside the Instagram app owned by

Facebook (FB), its chief nemesis.


IBD'S TAKE: After hitting a peak of 29.44 on its second day of trading, Snap has cratered to a record low of 11.81. It carries an IBD Composite Rating of 14 out of a possible 99. The IBD 50 flagship screen of leading growth stocks gives you 50 companies showing top-notch fundamentals.


Snap missed estimates in various areas as analysts dropped their price target on the company and some bemoaned that Snap did not provide forward-looking guidance, as is common for publicly traded companies.

"Snap also lost more money pro-forma and burned more cash than at any time in its young history, bruising its ability to maintain altitude and credibility with investors," wrote Summit Redstone Partners analyst Jonathan Kees in a note to clients. Kees lowered his price target on Snap to 8 from 10, with a sell rating. Kees said it's too early to determine the impact of new products as well as the effectiveness of Snap's ad platform..

"We believe that Snap will become a niche tool for advertisers targeting the under 25-year-old segment," he wrote.

A big problem for Snap is that it hasn't achieved escape velocity from Instagram, which has copied all of Snap's most popular features. But in the conference call Spiegel suggested it will get harder for Facebook to maintain its copy-cat approach.

Snapchat allows people to express themselves in the moment, using the application to take photos or record videos that they can creatively enhance and instantly broadcast to other users on the platform. Snap generates revenue primarily through advertising and advertising products.

FBN Securities Analyst Shebly Seyrafi, in a note to clients Wednesday, said he thinks Snap could become an acquisition target if the stock falls below 14, which it currently has done. The most likely acquirer would be Facebook, he wrote, though Spiegel, "appears (for now) unlikely to sell 'his baby,' "

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This is source I found from another site, main source you can find in last paragraph

Source : http://www.investors.com/news/technology/can-snap-emerge-from-facebook-shadow-some-say-it-can-be-done/

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