META - Snap: Maximum Bullish On All-Round Strong Growth And AI Monetization

2024-05-02 06:42:38 ET

Summary

• Snap reports strong all-round growth from direct response, brand advertising and subscriptions, with further tailwinds ahead.
• Snap still trades at a massive discount in price to sales multiple to Pinterest, Reddit and Meta Platforms, and its app appeal to younger audiences is often not understood.
• Snap is demonstrating accelerated AI monetization in Snapchat+ and has one of the largest used chatbots in MyAI.
• Further strategic partnerships with tech peers expected in the nearer term.
• 50% upside price target to fair value.

Summary

This is a follow-on to my Strong Buy rating article on Snap ( SNAP ) on 1 March 2024 at its price of $10.73.

Whilst Snap's stock price at $15.05 on Tuesday's close is up 40% from my Strong Buy call, there is still major upside ahead both in the near term and over a 12-month horizon, in my view. Snap's strong Q1 result and guidance for Q2 represents an important inflection point in both Snap's growth and the stock price momentum for the stock's bulls. In the nearer term, I expect Snap to rise and potentially break above its 52-week high of $17.9 reached in January, following a similar price trajectory of its stock price run from November to January. The difference being that November's previous price surge from $11 levels to the $17.90 high was based on sentiment (not actual reported results) of a rebounding advertising environment and new partnership announcements. Whereas, the difference now is that Snap has demonstrated Q1 strong results, after its Q4 2023 disappointment. Within a 12-month horizon, I see Snap stock reaching at least $22, and potentially within this year....

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