Around the time when Snap IPO’ed, research analysts
complimented the company’s young and engaged audience and ability to increase
the advertisements sales. As a result, average
equity research analyst price target was $28/ share which was higher than the
$17/share IPO price in March 2017.
However, recently, research analysts at Morgan Stanley, Citi, Piper
Jaffray, Nomura, etc.) have decreased they targets significantly with some
below the $17/share. Recent Snap
earnings have indicated that user growth was weaker than expected, there has
been some struggle with taking digital advertisement market share from Facebook’s
Instagram and Google, and the company has not convinced advertisers of its
return on investment. Facebook has been increasingly
aggressive and has more engineers, capital and management than Snap. In fact, Instagram Stories has 250 million daily
active users vs. Snap’s 166 million users.
As of 7/13, the stock price is approximately $16/share. There are a lot of traders shorting the
stock. The current short interest is about
a quarter of the shares outstanding. Short
sellers made profits of up to $396 million in just under six weeks in June and
July. But I do want to point out that
there are some research analysts that believe Snap is worth more than the IPO
price. Per FactSet, the average target
price is $20/share. I will be tracking
the stock in the next couple of weeks. The
post IPO share lock-up period will expire at the end of August and will not be surprised if
the price continues to decline as the share float outstanding will increase by
more than 500%.
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