Social media stock Snap (NYSE:SNAP) has been struggling to recover from its epic (near-90%) plunge at the hands of daunting macro headwinds and stiff competition. At this juncture, it seems like the firm is willing to explore any nascent technologies to turn the tides back in its favor to spark a snap back. As Snap’s ChatGPT-powered “My AI” chatbot (which assists users with the app and offers personalized suggestions) is helping bring attention to the firm, its turnaround story looks more interesting.
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That said, as AI tech (ChatGPT and all the sort) finds its way into nearly anything digital, Snap’s relatively early adoption of AI tech may not be the big solution to the firm’s woes. The company still seems to be between a rock and a hard place, with digital ad spending in a funk while rivals continue to power ahead in this challenging economic environment.
With troubling trends and quite a few negative headlines regarding Snap’s “My AI” offering, I find it hard to be optimistic. For now, I’m maintaining a neutral stance, at least until Snap can shed light on a plan to turn the tides on ads.
Social Media and AI Seem Like a Perfect Combo
As macro headwinds weigh heavily on the ad businesses of top social-media firms, many are likely to turn to cutting-edge AI tech for a shot at some sort of relief. Companies can’t control the macro environment, but they can do everything within their power to help offset near-term headwinds with exciting new technologies. As companies embrace AI tech, they’ll also be able to kick off new growth drivers that could help fuel impressive results well after a potential recession ends.
It’s not just chatbots like “My AI,” ChatGPT, Bing, or Bard that will help keep driving AI innovation higher from here. AI is spreading into other product categories that could prove more easily monetizable.
More recently, code generators like OpenAI’s CodeX, GitHub’s Copilot, Replit’s GhostWriter, and Amazon’s (NASDAQ:AMZN) CodeWhisperer have been making headlines.
Undoubtedly, these AI-powered coders may be causing some jitters in the software development community. Such products will surely help coders become more productive. However, it’s not too far-fetched to imagine such platforms eating away at the supply of junior-level positions in software development.
As more efficiency- and productivity-enhancing AI platforms come to light, the troubled social-media firms may have a way to navigate this harsh macro environment.
Meta Platforms (NASDAQ:META) is moving forward with its so-called “year of efficiency.” Significant AI advances will help the firm trim away costs while improving upon a wide range of metrics. Meta’s commitment to spending on AI is quite remarkable.
For now, I’d look for Meta to pursue behind-the-scenes AI technologies to help it solve the slate of issues that the macro environment has brought forth. Indeed, it will be interesting to see how ad growth holds up as Meta and other social-media firms leverage the power of AI to help reduce the pain.
Snap’s Consumer-Facing “My AI” is Drawing Interest and Hate
Snap’s ChatGPT-powered “My AI” chatbot helped drive growth over at Snapchat+ (it was initially only for Snapchat+ users but is now free). That said, many users have had some pretty negative experiences with the platform. That’s always a risk when being a tad too early in the game with nascent technologies like AI chatbots.
The big-tech firms seem to be proceeding cautiously with AI, and they’re smart to do so. Why risk reputational damage and shortcomings by launching a hyped product that may not be well-polished?
At this juncture, it seems like Snap is willing to pull out all the stops to get back on the right track. As the “My AI” technology becomes free, we’ll get a gauge of just how much of the ChatGPT chatbot hype will spread to the troubled social-media firm.
For now, I believe Snapchat needs to put in more work on “My AI” assistant if it’s to shrug off the rocky start.
Is Snap Stock a Buy, According to Analysts?
Turning to Wall Street, SNAP stock comes in as a Hold. Out of 26 analyst ratings, there are five Buys, 18 Holds, and three Sells.
The average Snap stock price target is $10.70, implying upside potential of 8.3%. Analyst price targets range from a low of $7 per share to a high of $15 per share.
The Bottom Line on Snap
Many big tech firms have ambitious AI plans and products that’ll be rolling out of the pipeline. Snap’s early push with “My AI” accompanies a handful of risks. In any case, there doesn’t seem to be much in the way of expectations with the name while it’s trading at 3.4 times sales, a multiple that’s well below Meta’s.
