Snap Inc. (SNAP) is Drawing Interest from Investors: Key Information You Need to Know

Snap Inc. (SNAP): Key Insights for Investors

Snap Inc. (SNAP) has recently become a popular topic among investors, drawing significant attention on Zacks.com. If you're considering this stock, it's important to review several factors that could influence its short-term performance.

Recent Stock Performance

Over the past month, Snap's share price has declined by 27.4%, while the Zacks S&P 500 composite index saw a modest gain of 0.6%. The Internet - Software sector, which includes Snap, also experienced a drop of 9.8% during this period. This raises the question: what might be next for Snap's stock?

What Drives Stock Movements?

Although news headlines and speculation can cause quick shifts in a stock's price, long-term trends are typically shaped by fundamental factors. Investors often focus on these core elements when making buy-and-hold decisions.

Earnings Forecast Adjustments

At Zacks, the primary focus is on changes in earnings projections, as these are seen as the best indicators of a stock's intrinsic value. When analysts update their earnings forecasts to reflect new business developments, these revisions can signal where the stock might be headed. If estimates rise, the stock's fair value increases, which can attract buyers and push the price higher. Research consistently shows a strong link between earnings estimate trends and short-term stock price movements.

• Snap is projected to earn $0.08 per share this quarter, which would double its earnings from the same period last year. However, the consensus estimate has decreased by 3.5% over the past month.
• For the full year, analysts expect earnings of $0.51 per share, a 54.6% increase from the previous year. This estimate has risen by 2.8% in the last 30 days.
• Looking ahead to next year, the consensus is $0.62 per share, up 21.8% from this year's expected results, with a notable 31.9% increase in the estimate over the past month.

The Zacks Rank, a proprietary rating system with a strong track record, incorporates these earnings estimate changes along with other factors. Currently, Snap holds a Zacks Rank #3 (Hold), suggesting a neutral outlook for the near term.

Forward 12-Month EPS Trend

Revenue Growth Projections

While earnings growth is crucial, sustained revenue increases are necessary for long-term profitability. For the current quarter, Snap's sales are expected to reach $1.52 billion, up 11.8% year-over-year. Full-year revenue estimates stand at $6.79 billion for this year (a 14.5% increase) and $7.5 billion for next year (up 10.4%).

Recent Financial Results and Surprises

In the most recent quarter, Snap reported $1.72 billion in revenue, a 10.2% increase from the previous year. Earnings per share came in at $0.18, compared to $0.16 a year earlier. These results exceeded the Zacks Consensus Estimate for revenue by 1.01% and for EPS by 20%. Over the past four quarters, Snap has beaten revenue estimates every time but surpassed EPS expectations only once.

Valuation Overview

Evaluating a stock's valuation is essential for making informed investment choices. Comparing current valuation ratios—such as price-to-earnings, price-to-sales, and price-to-cash flow—to historical averages and industry peers helps determine if a stock is fairly priced. The Zacks Value Style Score, which grades stocks from A to F based on various valuation metrics, rates Snap as a D, indicating it is trading at a premium compared to its competitors.

Summary

The information above, along with additional resources on Zacks.com, can help you decide whether Snap deserves your attention. With a Zacks Rank #3, the stock is expected to perform in line with the broader market in the near future.