Skip to Content

Snap Inc Class A SNAP Stock Quote

| Rating as of

Morningstar‘s Stock Analysis SNAP

Valuation
Currency in USD
Is it the right time to buy or sell?
Is it the right time to buy or sell?

1-Star Price

INVESTOR

5-Star Price

INVESTOR

Economic Moat

INVESTOR

Capital Allocation

INVESTOR

Snap to Focus on Increasing Efficiency and Long-Term Profitability; FVE to $27; Shares Undervalued

Ali Mogharabi Senior Equity Analyst

Analyst Note

| Ali Mogharabi |

Snap disclosed its restructuring plan today, from which we had a few takeaways. First, we are pleased that management is prioritizing investments in Snap's core capabilities to generate free cash flow and profitability over investments in products that have high uncertainty regarding their growth and overall contribution to the top and bottom lines in the short and long term. Second, such prioritization is indicative of continuing maturity of the management team, mainly the co-founder and CEO Evan Spiegel, which increases our confidence in Snap not only hitting GAAP profitability but also maintaining it with improved capital allocation, benefiting shareholders in the long run. And third, the firm's third-quarter revenue update, which was above the FactSet consensus estimates, implies that Snap is improving its ad measurement tools, which likely are stabilizing advertising demand. However, this may be offset by continuing uncertainty in the macro environment and competition not only from Instagram but also TikTok, all of which could pressure ad spending on the platform. For this reason, we lowered our projections, resulting in a $27 fair value estimate, down from $30. While no-moat Snap is still attractive at current levels, our preferred names in this space remain wide-moat companies Alphabet and Meta.

Unlock Our Full Analysis With Morningstar Investor

Key Statistics SNAP

Company Profile SNAP

Business Description

Snap, which refers to itself as a camera company, has one of the most popular social networking apps, Snapchat, in developed regions such as North America and Europe. The firm has approximately 158 million daily active users. Snap generates nearly all of its revenue from advertising with 88% coming from the U.S. The firm is headquartered in Venice, California.

Contact
3000 31st Street
Santa Monica, CA, 90405
T +1 310 399-3339
Industry Internet Content & Information
Most Recent Earnings Jun 30, 2022
Fiscal Year End Dec 31, 2022
Employees 5,661