Snap (NYSE:SNAP) Shares Down 8.1% Following Analyst Downgrade

Key Points

• Snap shares fell 8.1% to approximately $5.32 after Zacks Research downgraded the stock from “hold” to “strong sell,” increasing concerns about profitability and advertising momentum.
• Analyst sentiment remains mostly neutral: Snap has an average “hold” rating and a consensus price target of $7.65, despite mixed target revisions from several firms.
• Snap’s latest quarterly results exceeded expectations, with revenue rising 18.9% year over year to $1.60 billion and an adjusted loss of $0.10 per share; however, insiders sold approximately 2.87 million shares worth $15.9 million over the past three months.

Snap Inc. (NYSE:SNAP - Get Free Report) shares were down 8.1% on Wednesday after Zacks Research downgraded the stock from a hold rating to a strong sell rating. The company traded as low as $5.31 and last traded at $5.32. Approximately 33,843,688 shares were traded during mid-day trading, a decline of 30% from the average daily volume of 48,659,684 shares. The stock had previously closed at $5.79.

Several other research analysts have also commented on the stock. Canaccord Genuity Group dropped their price target on shares of Snap from $7.00 to $6.00 and set a "hold" rating on the stock in a research note on Tuesday, April 14th. Stifel Nicolaus set a $7.50 price objective on Snap in a research note on Tuesday. Citigroup increased their price target on Snap from $6.50 to $6.75 and gave the company a "neutral" rating in a report on Tuesday. Piper Sandler reissued a "neutral" rating on shares of Snap in a research report on Tuesday. Finally, Guggenheim increased their price objective on Snap from $5.00 to $5.50 and gave the company a "neutral" rating in a research report on Tuesday. One analyst has rated the stock with a Strong Buy rating, eight have issued a Buy rating, twenty-four have issued a Hold rating and three have assigned a Sell rating to the company's stock. According to MarketBeat.com, the stock currently has an average rating of "Hold" and a consensus target price of $7.65.

Insider Activity at Snap

In other Snap news, CTO Robert C. Murphy sold 2,000,000 shares of Snap stock in a transaction dated Wednesday, May 13th. The stock was sold at an average price of $5.44, for a total transaction of $10,880,000.00. Following the transaction, the chief technology officer directly owned 47,012,324 shares of the company's stock, valued at approximately $255,747,042.56. The trade was a 4.08% decrease in their position. The sale was disclosed in a filing with the Securities & Exchange Commission, which can be accessed through this link. Also, CAO Rebecca Morrow sold 16,729 shares of the business's stock in a transaction that occurred on Monday, May 18th. The shares were sold at an average price of $5.60, for a total value of $93,682.40. Following the completion of the transaction, the chief accounting officer directly owned 512,811 shares in the company, valued at approximately $2,871,741.60. This trade represents a 3.16% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The sale was made to cover tax withholding obligations related to the vesting of equity awards. In the last three months, insiders sold 2,868,059 shares of company stock valued at $15,855,631.

Key Snap News

Here are the key news stories impacting Snap this week:

• Positive Sentiment: Q2 results and outlook beat expectations. Snap reported $1.60 billion in revenue, up 18.9% year over year and above the $1.54 billion consensus estimate. Its adjusted EBITDA reportedly surged 505%, while the $0.10 per-share loss was narrower than expected. Management also pointed to improving advertising demand, subscription growth, AI tools and positive free cash flow. Snap second quarter results lifted by improving advertising trends
• Positive Sentiment: Advertising momentum and the third-quarter forecast support the bull case. Higher spending from large North American advertisers and FIFA World Cup-related demand helped Q2, while Snap issued an upbeat third-quarter revenue outlook of approximately $1.7 billion. Snap stock jumps as World Cup ads, AI tools drive earnings beat and strong outlook
• Positive Sentiment: Options activity indicates speculative bullish interest. Traders purchased unusually high volumes of Snap call options, suggesting some investors are positioning for additional upside. Stock Traders Buy High Volume of Snap Call Options
• Neutral Sentiment: Analyst actions remain mixed. Wells Fargo, Citi and Cantor Fitzgerald raised their price targets, while Truist and Rosenblatt lowered theirs; most retained neutral, hold or equal-weight ratings. The revisions imply moderate potential upside but limited conviction.
• Neutral Sentiment: Acquisition speculation is not actionable. A commentary article discussed potential buyers if Snap’s founders ever sell, but it acknowledged that no deal or takeover discussions have been announced. Who Might Buy Snap If Its Founders Ever Decide to Sell
• Negative Sentiment: Zacks downgraded Snap from “hold” to “strong sell.” The unusually bearish call is weighing on sentiment despite the earnings beat and reinforces concerns about Snap’s profitability, competition and ability to sustain advertising momentum. Snap downgraded by Zacks Research
• Negative Sentiment: Execution risks remain. CEO Evan Spiegel did not provide details on pre-orders for the upcoming Specs smart glasses, leaving uncertainty around demand and the potential costs of the September launch. Snap CEO sidesteps Specs pre-order questions

Hedge Funds Weigh In On Snap

A number of large investors have recently made changes to their positions in the stock. Saba Capital Management L.P. lifted its position in Snap by 232.5% in the 1st quarter. Saba Capital Management L.P. now owns 4,727,808 shares of the company's stock worth $21,748,000 after buying an additional 3,306,024 shares during the last quarter. Empyrean Capital Partners LP purchased a new position in Snap in the first quarter worth about $25,300,000. Leonteq Securities AG purchased a new stake in shares of Snap during the fourth quarter valued at approximately $1,620,000. Eurizon Capital SGR S.p.A. purchased a new position in Snap in the 4th quarter worth approximately $1,629,000. Finally, Marsico Capital Management LLC bought a new position in Snap in the 4th quarter valued at approximately $5,620,000. 47.52% of the stock is owned by institutional investors.

Snap Trading Down 9.8%

The firm has a market cap of $8.82 billion, a P/E ratio of -21.73 and a beta of 1.03. The company has a debt-to-equity ratio of 1.67, a quick ratio of 3.53 and a current ratio of 3.53. The stock has a fifty day simple moving average of $4.96 and a 200 day simple moving average of $5.33.

Snap (NYSE:SNAP - Get Free Report) last issued its earnings results on Monday, August 3rd. The company reported ($0.10) earnings per share for the quarter, topping analysts' consensus estimates of ($0.12) by $0.02. The business had revenue of $1.60 billion during the quarter, compared to analyst estimates of $1.54 billion. Snap had a negative return on equity of 14.16% and a negative net margin of 4.90%.Snap's revenue was up 18.9% on a year-over-year basis. During the same quarter in the previous year, the firm earned ($0.16) EPS. On average, research analysts expect that Snap Inc. will post -0.07 earnings per share for the current fiscal year.

Snap Company Profile

Snap Inc is a camera and social media company best known for developing and operating Snapchat, a multimedia messaging application that allows users to send photos, videos and messages that disappear after being viewed. In addition to its core messaging service, Snap offers a suite of augmented reality (AR) tools, including custom Lenses and Filters, that enable users and third-party developers to create interactive and immersive experiences. The company also provides advertising solutions that allow brands to engage audiences through Snap Ads, Sponsored Lenses and Discover content on the platform.

Founded in 2011 by Evan Spiegel and Bobby Murphy, Snap has continually focused on innovation in camera technology and AR.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.

Continue following MarketBeat

Add MarketBeat as your preferred source on Google to see our latest stories in your feed.

Add As Preferred Source