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Snap (SNAP)
NYSE:SNAP
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Snap
(NYSE:SNAP)59Neutral
Positive Factors
Earnings
Snap reported 4Q:24 upside, issued a good-enough 1Q:25 outlook, and highlighted key initiatives for 2025.
User Growth
Snap added 10 million Daily Active Users quarter over quarter, surpassing expectations.
Negative Factors
Competition
The competitive landscape is daunting, the long-term gen AI movement favors the largest platforms, and digital ad spending remains ultra-sensitive to the vicissitudes of the economy.
Snap (SNAP) vs. S&P 500 (SPY)
Market Cap
$16.29B
Dividend YieldN/A
Average Volume (3M)28.31M
Price to Earnings (P/E)―
Beta (1Y)1.50
Revenue Growth16.40%
EPS Growth48.48%
CountryUS
Employees4,911
SectorCommunication Services
Sector Strength85
IndustryInteractive Multi-Media
Share Statistics
EPS (TTM)-0.42
Shares Outstanding1,442,210,800
10 Day Avg. Volume20,332,774
30 Day Avg. Volume28,314,950
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)3.09
Price to Cash Flow (P/CF)18.00
P/FCF Ratio22.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$13.27Price Target Upside35.55% Upside
Rating ConsensusHold
Number of Analyst Covering31
Snap Business Overview & Revenue Model
Company DescriptionFounded in 2010 and based in California, Snap, Inc. is a social media company and provides a camera platform in the U.S. and internationally. It has developed many technological products and services including Snapchat, which uses the camera and editing tools to take and share Snaps; Bitmojis, which are personal emojis; Spectacles, which are wearable sunglasses capable of taking Snaps and interacting directly with the Snapchat application. The company's primary source of revenue is advertising.
How the Company Makes MoneySnap Inc. primarily generates revenue through digital advertising. The company offers various advertising products, including Snap Ads, which are full-screen vertical video ads, Story Ads, Collection Ads, and Dynamic Ads tailored for direct response marketing. Snap also provides augmented reality (AR) advertising experiences, allowing brands to engage users through interactive AR lenses and filters. Additionally, Snap's Discover feature enables media partners to create content, providing another avenue for advertising. Partnerships with content creators and media companies enhance its content offerings, attracting more users and advertisers to the platform. Snap's advertising revenue model is complemented by its data analysis tools that help advertisers target and measure the impact of their campaigns effectively.
Snap Financial Statement Overview
Summary
Snap shows strong revenue growth and improved cash flow generation, reflecting potential for future stability. However, ongoing unprofitability and high leverage present significant risks that need to be addressed for long-term growth.Income Statement
Snap's TTM revenue grew by 16.41% compared to the previous year, indicating strong growth. However, the company remains unprofitable with a negative net profit margin of -12.82% and a negative EBIT margin of -14.68%. The gross profit margin is healthy at 52.42%, showing that the company has a strong core product profitability despite overall losses.67
Positive
Balance Sheet
Snap has a high debt-to-equity ratio of 1.73, indicating significant leverage, which could pose financial risks. The equity ratio of 30.88% suggests a moderate level of stability, but the return on equity is negative at -28.05%, reflecting the overall unprofitability of the company.55
Neutral
Cash Flow
Snap's free cash flow showed strong growth of 527.83% from the previous year, reflecting improved cash generation. The operating cash flow to net income ratio is 0.60, indicating positive cash flow relative to losses. However, the company needs to continue improving its cash flow to achieve sustained profitability.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 5.36B | 4.61B | 4.60B | 4.12B | 2.51B | Gross Profit |
| 2.89B | 2.49B | 2.79B | 2.37B | 1.32B | EBIT |
| -787.29M | -1.40B | -1.40B | -702.07M | -862.07M | EBITDA |
| -492.60M | -1.10B | -1.18B | -337.55M | -742.21M | Net Income Common Stockholders |
| -697.86M | -1.32B | -1.43B | -487.95M | -944.84M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 3.38B | 3.54B | 3.94B | 3.69B | 2.54B | Total Assets |
| 7.94B | 7.97B | 8.03B | 7.54B | 5.02B | Total Debt |
| 4.24B | 4.34B | 4.18B | 2.63B | 2.00B | Net Debt |
| 3.20B | 2.56B | 2.75B | 637.18M | 1.46B | Total Liabilities |
| 5.49B | 5.55B | 5.45B | 3.75B | 2.69B | Stockholders Equity |
| 2.45B | 2.41B | 2.58B | 3.79B | 2.33B |
| Cash Flow | Free Cash Flow | |||
| 218.65M | 34.79M | 55.31M | 181.84M | -225.48M | Operating Cash Flow |
| 413.48M | 246.52M | 184.61M | 292.88M | -167.64M | Investing Cash Flow |
| -717.08M | 570.95M | -1.06B | 90.23M | -729.86M | Financing Cash Flow |
| -428.62M | -458.79M | 306.71M | 1.07B | 922.79M |
Snap Technical Analysis
Negative
9.79
Price Trends
11.01
Negative
11.19
Negative
11.92
Negative
Market Momentum
-0.36
Positive
38.29
Neutral
19.57
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SNAP, the sentiment is Negative. The current price of 9.79 is below the 20-day moving average (MA) of 10.49, below the 50-day MA of 11.01, and below the 200-day MA of 11.92, indicating a bearish trend. The MACD of -0.36 indicates Positive momentum. The RSI at 38.29 is Neutral, neither overbought nor oversold. The STOCH value of 19.57 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SNAP.
Snap Risk Analysis
Snap disclosed 65 risk factors in its most recent earnings report. Snap reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Snap Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
84 Outperform | $1.69T | 28.01 | 34.14% | 0.30% | 21.94% | 61.97% | |
79 Outperform | $25.08B | 13.15 | 39.19% | ― | 19.35% | ― | |
76 Outperform | $117.29B | 95.60 | 20.60% | ― | 18.36% | ― | |
74 Outperform | $2.09T | 21.17 | 30.80% | 0.35% | 13.89% | 38.99% | |
73 Outperform | $22.64B | 23.40 | 11.31% | ― | 3.05% | 55.96% | |
59 Neutral | $30.54B | 0.25 | -13.23% | 4.04% | 2.36% | -49.53% | |
59 Neutral | $16.29B | ― | -28.48% | ― | 16.40% | 48.48% |
* Communication Services Sector Average
Performance Comparison
SNAP
Snap
9.79
-1.37
-12.28%
META
Meta Platforms
656.47
161.74
32.69%
GOOGL
Alphabet Class A
173.02
42.10
32.16%
SPOT
Spotify Technology SA
586.83
318.80
118.94%
PINS
Pinterest
36.20
1.58
4.56%
ZM
Zoom Video Communications
75.60
9.18
13.82%
Snap Earnings Call Summary
Earnings Call Date: Feb 4, 2025 | % Change Since: -15.60% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Positive
Snap Inc. showed strong user growth and revenue improvements with significant advancements in AI and AR. However, challenges in North American brand advertising and some issues with user engagement in the Snapchat redesign were noted.Highlights
Significant User Growth
Daily active users reached 453 million in Q4 2024, an increase of 39 million year-over-year.
Revenue and Profitability Improvement
Q4 revenue increased 14% year-over-year to $1.56 billion, with $276 million in adjusted EBITDA and $182 million in free cash flow.
Snapchat+ Subscription Growth
Snapchat+ subscribers grew from 7 million to 14 million in 2024, with subscription revenue increasing 131% year-over-year.
Strong Performance in Rest of World and Europe
Rest of World revenue grew 35% year-over-year, and Europe revenue grew 20% year-over-year.
AI and AR Innovation
Significant strides in AI research, including a new AI model capable of generating images quickly and the introduction of the Lens Creator Rewards program.
Lowlights
Weakness in North America Brand Advertising
Brand-oriented advertising revenue was down 1% year-over-year, with continued weakness concentrated among a small group of large clients in North America.
Challenges with Simple Snapchat Rollout
Some users experienced engagement losses, particularly those who preferred the old Stories page layout.
Company Guidance
During Snap Inc.'s fourth quarter 2024 earnings call, the company reported significant progress across various metrics. Daily active users reached 453 million, marking a year-over-year increase of 39 million, while revenue grew by 14% to $1.56 billion. This growth was driven by direct response advertising and the Snapchat+ subscription service, which saw subscribers double to 14 million. The quarter's achievements included $276 million in adjusted EBITDA, a 60% adjusted EBITDA flow-through, $182 million in free cash flow, and a net income of $9 million. For the full year 2024, Snap generated $5.36 billion in revenue, up 16% year-over-year, with $509 million in adjusted EBITDA and $219 million in free cash flow. Looking ahead to 2025, Snap plans to further develop its advertising platform with new ad placements and machine-learning infrastructure while enhancing the Snapchat experience and expanding its augmented reality ecosystem.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.