Analyst Highlights Potential Catalyst for Snap (SNAP) Stock

Richard Greenfield, partner at LightShed Partners, said in a recent program on CNBC that Snap Inc (NYSE:SNAP) latest stock rally was probably because of market expectations that if TikTok is forced to launch a completely new app for US users, it would positively impact Snapchat. The analyst said Snapchat CEO Evan Spiegel is not a “seller,” adding that he does not believe the executive would be interested in selling the company.

“TikTok’s going to have to roll out a new app. Everyone, you know, again, according to press reports, and I realize China hasn’t finalized this, but assuming it’s true, you’re going to need a new app. Is it going to function as well? Like, is this going to be the same Tik Tok experience that has been so successful? I mean that could be an answer too, is just maybe hope that in Tik Tok’s shift to the US or shift to this new experience it helps Snap because remember Snap’s ad revenue growth has been low single digits, dramatically below the peer group over the last several quarters.”

RiverPark Large Growth Fund stated the following regarding Snap Inc. (NYSE:SNAP) in its Q3 2024 investor letter:

Snap Inc. (NYSE:SNAP): SNAP was a top detractor in the third quarter following a second quarter earnings report that fell short of high expectations. While the company reported strong Daily Active User (DAU) growth (432 million +10% year-over-year) and time spent watching content on the app (+25% year-over-year), revenue of $1.24 billion was below the midpoint of the company’s guidance and slightly below investor expectations. Management pointed to weakness in their Brand Advertising vertical, specifically highlighting demand for retail, technology, and entertainment advertising for slowing through the quarter. SNAP did exceed EBITDA expectations by $15 million due to better operating leverage, but guided third quarter EBITDA below expectations as the company plans to make some targeted investments around AI infrastructure.

We believe that improvements in SNAP’s ad platform and continued growth in DAU should lead to continued acceleration in revenue growth over the next several quarters and years. With 2023 revenue of $4.6 billion (as compared with Meta’s $134 billion), we believe SNAP has a long runway for both revenue growth and expanded profitability.”

While we acknowledge the risk and potential of SNAP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SNAP and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.