Snap PT Increased to $52 by Guggenheim
Snap is on Wall Street’s good side after a blowout earnings report that saw 52% in quarterly revenue growth, and Guggenheim still sees an under-appreciated long-term monetization opportunity for the company. The firm raised its price target to $52, just five days after lifting its target to $36 from $28 in response to earnings.
Virtuous cycle: Analyst Michael Morris emphasizes what he calls a full-funnel virtuous cycle for consumers, advertisers, and content creators. That means innovative products and features such as augmented reality, Lens Studio, Sounds on Snapchat, and gaming will fuel higher user engagement, an expansion of content partnerships, and stronger return on investment for advertisers. Morris believes this momentum will drive Snap’s platform revenue to grow 10x over the next decade.
Small piece of a huge pie: Facebook and Google will continue to dominate the digital advertising market, but the niche offering and growing market position that Snap has developed is nothing to scoff at. eMarketer estimates that global digital ad spending will jump 2.4% this year to $332.84 billion as it becomes a bigger portion of brands’ overall marketing budgets. Guggenheim predicts “the global advertising market alone will exceed $1 trillion by 2030 with Snap capturing about 3% of that market.”
Big picture: Snap’s share value has nearly tripled over the past year. It’s been quite the comeback for CEO Evan Spiegel and Co., who have engineered an improbable comeback from December of 2018 when the stock briefly fell below $5 a share. Snap’s innovative ad products and 90% reach with the Gen-Z demographic in key markets including the U.S, France, and the UK are resonating with advertisers as consumer attention to traditional linear entertainment declines.
