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Snap Reported Strong Q1; Continues to Benefit From Strong Online Ad Growth; Increasing FVE to $68

Ali Mogharabi Senior Equity Analyst

Analyst Note

| Ali Mogharabi |

Snap’s first-quarter revenue easily exceeded expectations while losses were slightly higher than the FactSet consensus estimates. The firm posted strong top-line growth driven by higher user count and monetization as advertisers are no longer just testing Snap’s platform. Higher losses were mainly due to Snap’s more aggressive investments in marketing to further increase the firm’s ad client list. We have increased our projections as Snap’s user growth, higher monetization, and attracting more advertisers, which are indicative of a possible network effect, are likely to continue. We now value the stock at $68, up from $64, leaving the shares near fair value.

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Company Profile

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.

2772 Donald Douglas Loop North
Santa Monica, CA, 90405
T +1 310 399-3339
Sector Communication Services
Industry Internet Content & Information
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type Speculative Growth
Employees 3,863