Bernstein maintains Snap stock with $12 target, cites TikTok factor

On Wednesday, Bernstein analysts led by Mark Shmulik maintained a Market Perform rating on Snap Inc (NYSE:SNAP) with a steady price target of $12.00. The analysts highlighted the uncertain environment surrounding the social media sector, particularly due to the potential ban of TikTok in the United States. This situation presents a significant opportunity for Snap, which currently has a market capitalization of $19.46 billion and has seen its stock surge over 33% in the past six months, according to InvestingPro data. The potential ban could significantly impact Snap’s position, as billions in advertising dollars and a vast amount of user engagement time could become available.

Shmulik noted that while current expectations for Snap were low, the company’s fortunes could significantly change if TikTok were to be banned. While Snap has posted revenue growth of 13.66% over the last twelve months and maintains strong liquidity with a current ratio of 4.04, the company is not yet profitable. "It’s IMPOSSIBLE to ignore the billions of ad dollars at 170M users worth of minutes that would be up for grabs if TikTok were to disappear," he stated. Despite the potential benefits for Snap, the decision is out of their hands. However, the analyst suggested that Snap would likely be eager to see a TikTok ban occur.

Snapchat’s strategy, as pointed out by Bernstein, is to focus on the elements within its control and to prepare for any possible shifts in the social media landscape. Shmulik commented on the company’s readiness to capitalize on any changes, "All Snapchat can do is keep plugging away at the things they can control, and be ready if that red button gets pushed. Snap’s ready."

The analyst’s remarks reflect a broader sentiment of cautious optimism for Snap’s ability to navigate the current market and potentially benefit from external factors such as a TikTok ban. The reiteration of the Market Perform rating and the $12.00 price target suggests that Bernstein sees the company as adequately valued at its current levels, with the looming industry developments taken into account.

The social media industry is closely watching the situation with TikTok, as its potential ban could reshape the competitive landscape. Snap Inc’s shares continue to trade on the New York Stock Exchange, with analysts setting price targets ranging from $9 to $17. For deeper insights into Snap’s valuation and growth prospects, InvestingPro offers exclusive access to detailed financial health scores and comprehensive analysis, including additional ProTips and Fair Value estimates that could help investors make more informed decisions in this dynamic sector.

In other recent news, Snap Inc has been the focus of several analyst firms following its positive fourth quarter results. BMO Capital Markets maintained an Outperform rating on Snap, highlighting the potential for revenue growth from advancements in artificial intelligence and machine learning, as well as Snap’s commitment to content creators. The firm also pointed out the increase in active advertisers on the platform, attributing it to the introduction of Sponsored Snaps and Promoted Places.

Similarly, JMP Securities reiterated their Market Outperform rating on Snap stock, citing strong fourth-quarter earnings and revenue slightly above consensus. The firm emphasized the role of the small and medium-sized business segment in driving ad revenue growth and expressed confidence in Snap’s revenue-generating capabilities despite planned expansions in headcount and infrastructure.

Meanwhile, Citi raised its Snap stock price target to $13.50, maintaining a Neutral rating. The firm noted Snap’s strong fourth-quarter results, driven by its direct response advertising platform and new advertising formats. The company’s subscription service, Snapchat+, also reached 14 million subscribers, a 100% increase year-over-year.

On the other hand, BofA Securities updated its outlook on Snap, raising the price target to $14.50 while keeping a Neutral stance. The firm acknowledged Snap’s promising quarterly results but expressed concerns about user growth in key markets and the potential limitation on EBITDA growth due to increasing expenses.

These recent developments reflect the analysts’ varying confidence in Snap’s strategic direction and revenue growth potential.

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