Snap: Planning For A Hurricane That Probably Won't Arrive

 

  • Snap reported a solid Q3, but the company guided to a potentially weak Q4 on some huge negative assumptions.
  • The social media company now trades at only 3x sales with the market not accurately viewing the recent revenue slowdown in light of the massive growth the last 2 years.
  • Snap reported strong 19% DAU growth providing a better signal on normalized growth.
  • The stock is too cheap here with the panic sell off.
  • This idea was discussed in more depth with members of my private investing community, Out Fox The Street. Learn More » 
Snap (NYSE:SNAP) just reported a solid quarter and guided to very conservative Q4 numbers, causing the market to run in fear. The social media company is oddly preparing for a hurricane by announcing another $500 million share buyback. My investment thesis is finally Bullish on the stock following a Bearish view since nearly $60 due to Snap trading based on pending doom I think is unlikely to arrive.

Read the full article on Seeking Alpha. 

Disclosure: Please review the disclaimer page for more details. 

Update - Oct. 21
Snap is hitting new lows today, so no reason to be a hero and rush into the stock here. Looks like the analysts are blindly reiterating the weak Nov./Dec. thesis despite the company making huge assumptions and constantly missing internal targets both on the upside and downside. 

-Nowak also noted that by not giving guidance for its fourth quarter, but providing some commentary around it, it seems that Snap's (SNAP) ad business is growing around 9% year-over-year, despite having an easy comparison to last year. Nowak estimated that Snap's (SNAP) ad business grew around 4% on a year-over-year basis in September, sped up in October, and is likely to decline between 3% and 6% year-over-year in November and December.

-Bank of America analyst Justin Post downgraded Snap (SNAP) to neutral following the third-quarter results, and said the the outlook suggests it has a "high macro exposure" going into 2023.


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