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UPDATE: JPMorgan Double Downgrades Snap Inc (SNAP) to Underweight, Street Low PT $9

July 22, 2022 5:57 AM EDT
Get Alerts SNAP Hot Sheet
Price: $10.19 --0%

Rating Summary:
    24 Buy, 29 Hold, 4 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 7 | Down: 3 | New: 27
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(Updated - July 22, 2022 5:58 AM EDT)

JPMorgan analyst Doug Anmuth downgraded Snap Inc (NYSE: SNAP) from Overweight to Underweight with a price target of $9.00 (from $24.00).

The analyst comments "We’re downgrading shares of Snap to Underweight & establishing a Dec ’23 PT of $9 based on ~2x 2024E revenue. Despite warning in May that its 2Q results would likely come in below the low end of the +20%-25% Y/Y guide, 1) Snap’s reported growth of +13% showed greater deterioration than expected, 2) 3QTD is trending around flat Y/Y (which could mean down Q/Q), & 3) in not providing guidance for 3Q, Snap suggested that forward visibility remains very challenging. Snap believes the primary driver of its advertising weakness is the macro environment, which is driving smaller budgets, lower bid rates, & overall softer demand. However, platform policy changes from Apple & increased competition are also significant factors. While at times over the past few quarters Snap has appeared to be recovering from Apple’s privacy changes, we believe they continue to pressure the business at the bottom of the funnel. Additionally, while Snap will not call out TikTok specifically, we believe TikTok’s strong engagement & rapid monetization growth (eMarketer estimates ~$12B in 2022 revenue) are having an outsized impact on Snap’s business. In terms of laterals, we expect all online ad companies to see material macro weakness, w/our view supported by recent cautionary internal memos at both Google & Meta. However, we think the pressure on Snap is greater than on the 2 bigger platforms which have more entrenched budgets, larger scale, & generally higher ROI, whereas spending on Snap is relatively earlier stage & sometimes experimental. We’d expect the entire online ad sector to see share price pressure, & expectations should come down further for GOOGL, META, & PINS."

For an analyst ratings summary and ratings history on Snap Inc click here. For more ratings news on Snap Inc click here.

Shares of Snap Inc closed at $16.35 yesterday.


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