Snap Inc (NYSE: SNAP) recently shared its reduced expectations of Q2 FY22 revenue and EBITDA amid the challenging macroeconomic environment.
Credit Suisse analyst Stephen Ju maintained an Outperform rating on Snap as it cut the price target from $77 to $59 (278.7% upside).
Ju called out Snap's 1) minimal exposure to travel as consumer dollars flow from gross merchandise value/things to gross travel bookings/experiences, 2) higher exposure to weaker categories – entertainment, commerce, CPG, tech, and telco but the financials vertical is likely an incremental headwind (particularly crypto) – which grew 50% in 1Q22 and is a 3) likely victim of flight to larger platforms – given the uncertain macro/geopolitical environment and with only ~2% share of total ad budgets.
The re-rating reflected 1) potential for better-than-expected DAU growth with a revamped Android app released in more geographies, 2) potential for better-than-expected ad revenue on ramping product rollouts and marketer adoption, 3) monetization optionality from increased engagement from Games, Maps, and longer-term Spotlight.
Price Action: SNAP shares traded lower by 7.41% at $14.42 on the last check Tuesday.
Photo by Souvik Banerjee from Pixabay
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