Snap (SNAP) Surges 17% After Smashing Q2 Views Across the Board to Yield a Dozen Price Target Hikes

July 23, 2021 7:59 AM EDT
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Price: $74.76 +3.15%

Rating Summary:
    40 Buy, 14 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 7 | Down: 15 | New: 24
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Shares of Snap Inc (NASDAQ: SNAP) are up 17% in pre-open Friday after the social media titan smashed analysts’ expectations for the second quarter.

Snap delivered adjusted EPS of $0.10 per share while analysts were expecting the company to deliver a 1 cent loss. Revenue for the quarter easily topped the market expectations - $982 million vs $846 million projection by Refinitiv.

DAUs were reported at 293 million, again higher than the $290.3 million expected from analysts. ARPUs also topped market estimates - $3.35 vs $2.92 expected.

“Our second quarter results reflect the broad-based strength of our business, as we grew both revenue and daily active users at the highest rates we have achieved in the past four years,” said Evan Spiegel, CEO.

“We are pleased by the progress our team is making with the development of our augmented reality platform, and we are energized by the many opportunities to grow our community and business around the world.”

An extremely strong Q2 performance yielded at least 12 price target increases from Wall Street analysts after they adjusted estimates/multiples following yesterday’s report.

UBS analyst John Hodulik raised the price target to $92.00 per share from $85.00. He commented:

“We come away from Snap's strong 2Q print, aided by a more muted IDFA rollout, with the view that more time to work on ad stack solutions and handhold advertisers will be a durable benefit as they manage through the changes. On the product roadmap, management continues to point to strong long-term monetization opportunities and notes increased demand for "innovative ad formats" and the potential to ramp monetizable surfaces within the app (i.e., Spotlight, AR/Lenses, and Map in particular),” Hodulik said in a note sent to clients.

“While near-term pricing dynamics (+122% YoY in average eCPMs) may be more transitory, we believe increased adoption of Dynamic Ads and the potential to increase inventory should keep concerns at bay around ad load saturation. Net-net, we increase our revenue and EBITDA estimates for '22 by 6% and 13%, respectively, to reflect better than expected IDFA risk dynamics and a healthier than expected advertising environment.”

JMP analyst Ronald Josey joined his colleagues in hiking the PT on SNAP to $94.00 per share from the prior $89.00 as advertising demand continues to soar.

“Following 2Q21 results whereby revenue came in 16% above consensus given greater overall advertising demand led by Snap’s North America region and EBITDA of $117 million compared to guidance of ($10 million) at the midpoint,” he wrote in a memo on SNAP.

“Simply put, Snap is executing extremely well with DAU growth across all regions, Spotlight adoption continuing to ramp- Spotlight DAUs were +49% Q/Q - and an advertising tech stack that is gaining scale as management believes it is on par with other major advertising platforms.”

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