Can Snap Stock Attract Investors With New Leadership

Will new executive leadership be enough to sway investors opinion of Snap stock?


Snapchat stock (NYSE: SNAP) has been underperforming for quite some time, causing investors to avoid Snap shares. Recently, Snap’s decline has been more prevalent than ever and the challenges that it faces are becoming more apparent.

Snap stock price has dropped by almost 61% year-on-year. Last year Snapchat share price even fell 14% below its IPO price of $17. When looking at the highs of Snapchat, we can see that it has lost nearly 80% of its value. Many analysts have the opinion that Snap’s IPO was one of the worst in recent years.

However, with price declines comes an entry point for some investors who are willing to brave the storm. Snapchat is popular amongst a demographic grouped as Generation Z. The appeal with 18-25 year old’s has lead some analysts to giving Snap stock a BUY rating.

Despite its appeal with young people, Snap seems to be losing that demographic also. In Q3, it’s clear to see that Snapchat’s fundamental user base is declining. Snap has reported that daily active users has dropped by 1% year-on-year to 186 million. This is just below the average analyst estimate. The drop in daily activity can be attributed to Instagram utilizing the same features that made Snapchat popular in the first place. Snapchat also redesigned its app earlier this year, users didn’t take well to the new interface and caused a drop in daily activity. This drop in daily activity is an important metric for analysts and one that can lead to selloffs if it drops significantly. For SNAP stock price to make any strong gains, it must increase its active users and monetize them more appropriately.

When looking at its competitors, both Facebook stock and Twitter shares look like more promising long-term investments. 

The Future Of Snap Stock

The future of SNAP stock is not yet decided as the company is still pushing to regain users and take back some of the market share in the social media sector.

In an attempt to appeal to investors and give the platform some new-life, Snap has partnered with media companies like Comcast and CBS. The company has hired 21st Century Fox executive, Julie Henderson, to become the chief communications officer for the company.

In Q4, Snap is expecting a 24% – 33% increase in annual sales growth, with an EBITDA loss between $75 million – $100 million.

I forecast Snapchat stock price will sit at around $7.50 in the next 12-months.

Our analyst gives Snapchat shares a HOLD rating.

To conclude, for Snap to succeed in the long term, it needs to attract more advertisers and work on monetization. Unlike Instagram and Facebook, Snapchat is yet to offer tools for marketers to post advertisements to reach the platform’s audience.

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