Goldman analyst Heath Terry kept his buy rating on the stock in place, but lifted his price target by $23 to $70 per share, the highest on Wall Street, citing ‘a number of tech innovations and product partnerships’ that could accelerate revenue growth beyond Street forecasts.
Snap itself declined to provide current-quarter revenue guidance when it published Street-beating third quarter earnings on October 20, owing to the broader pandemic uncertainty, but noted that “year-over-year revenue growth of 47% to 50% is attainable” if holiday-season advertising holds to previous trends.
“Snap’s Spotlight product, new ad campaign objectives and bid types, and the Unity partnership, particularly Unity Ads’ inclusion into the Snap Audience Network (SAN) have the potential to drive further momentum in engagement growth as well as provide valuable scale to advertisers,” Terry said.
“In addition, our recent ad checks as well as 3rd party data suggest outperformance relative to the company’s initial guidance for 4Q, acceleration we believe is sustainable beyond the current quarter.”
Snap shares were marked 11.2% higher in early trading Tuesday to change hands at $53.70 each, a move that would extend the stock’s six-month gain to around 130%. Snap traded at an all-time high of $54.71 each on December 17.
Snap shares first traded on the Nasdaq on March 2, 2017 at $25 a share after its IPO launch at $17 each. The stock then tumbled to under $5 a share in December amid uneven attempts by co-counder and CEO Evan Spiegel to simultaneously boost the signature messaging app’s appeal to older users while maintaining its zeitgeist among celebrity endorsers.
Since 2019, however, the stock has been an uninterrupted run that has added nearly $70 billion in value to the Santa Monica, California-based tech group as it added more users, and attracted more advertisers, to its Snapchat platform, a hugely influential social media tool for teenage and young adult users.
Snap’s third quarter revenues grew 52% from last year, thanks in part to the July boycott of Facebook (FB) – Get Report by key advertisers, with daily active users rising 18% from the same period last year to 249 million.
On an adjusted basis, the group also nudged itself into a third quarter profit of a penny a share, compared to a 4 cents per share loss last year and the Street consensus forecast of a loss of 5 cents per share.