In many cases, holding a stock through its earnings release may result in experiencing the dreaded “buy the hype, sell the news” cycle, wherein many traders take profits by selling in a downward self-fulfilling prophecy. However, sometimes the stock can skyrocket on its impressive quarterly results. The latter is what occurred to Snap Inc. (SNAP), which saw its share price climb 23.82% on Friday. (See Snap stock charts on TipRanks)
Reporting on the jubilation is Justin Post of Bank of America, who wrote that Snap beat the consensus on revenue, EBITDA and daily active users. Furthermore, it raised its FY22 guidance by 11%.
Post reiterated a Hold rating on the stock, and declared a price target of $80. This target is raised from his previous $70, but he now believes the valuation has most of its upside already priced in. The $80 price target suggests a possible 12-month upside of 2.60%.
Despite his Hold rating, Post added that upside for Q3 is expected to be generated by an increase in advertising and monetization opportunities in Maps and Spotlight. Furthermore, he remains “impressed by Snap’s product innovation,” and enthused by user strength following the economic reopening of the U.S. and the world.
Stating that Snap had a “great quarter,” the five-star analyst noted that average revenue-per-user was up 76%, and the app’s users grew by 23%. However, TikTok remains a formidable threat to Snapchat’s user base, and Snap’s high stock price could stifle short-term upside.
As for Post, he prefers internet-related stocks with more modest valuations, or those which are more exposed to upside from an economic reopening, such as Uber (UBER) or Google (GOOGL).
On TipRanks, SNAP has an analyst rating consensus of Moderate Buy, based on 18 Buy and 6 Hold ratings, and 1 Sell rating. The average Snap price target is $86.52, suggesting a potential 12-month upside of 10.97%. Snap Inc. closed trading Friday at a price of $77.97.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
