Fannie Mae, Freddie Mac shares tumble after conservatorship comments
On Wednesday, Evercore ISI adjusted its price target for Snap Inc (NYSE:SNAP) shares, bringing it down to $11.00 from the previous $13.00, while keeping an In Line rating on the company. Currently trading at $9.09 with a market capitalization of $15.4 billion, Snap appears undervalued according to InvestingPro analysis. Analyst targets for the stock range from $7.40 to $16.00, reflecting mixed sentiment about the company’s prospects. The revision follows Snap’s first-quarter earnings report, which was considered solid, but was overshadowed by the company’s decision not to provide formal financial guidance for the second quarter due to macroeconomic uncertainties.
Snap has reportedly faced headwinds at the beginning of the second quarter, although it has continued to see revenue growth of 14.9% over the last twelve months. A segment of advertisers has been affected by the upcoming change in the de minimis exemption, which analysts believe may have broader implications beyond the initially impacted China-based retailers. InvestingPro data shows the company maintains strong liquidity with a current ratio of 4.3, while operating with a moderate debt level.
The company’s management has historically provided commentary on quarter-to-date revenue growth even during volatile economic periods, such as in early to mid-2020 and early 2022. The lack of such commentary in the current report raises questions about the severity of the current situation. However, Snap has made a decision to reduce its 2025 Adjusted Operating Expenses (OpEx) guidance, albeit by a modest $50 million, which represents a 2% decrease, suggesting the situation might not be as dire as it could be.
Despite observing signs of fundamental improvement in the first quarter performance and noting the significant after-hours pullback in Snap’s stock price, Evercore ISI remains cautious. The firm has concluded its Tactical Underperform call with this latest note, maintaining the In Line rating for Snap shares. While the company isn’t currently profitable, InvestingPro analysis indicates expected profitability this year, with analysts forecasting positive earnings. Get access to 7 more exclusive InvestingPro Tips and a comprehensive Pro Research Report covering Snap’s detailed financial analysis and future prospects.
In other recent news, Snap Inc. reported its first-quarter 2025 earnings, revealing a narrower-than-expected loss with an EPS of -0.08, compared to the forecast of -0.13. The company also exceeded revenue expectations, reporting $1.36 billion against the anticipated $1.35 billion. Despite these positive results, Snap’s stock experienced a significant decline in after-hours trading. The company demonstrated a 14% year-over-year increase in total revenue, driven by a 9% rise in advertising revenue. Snap’s adjusted EBITDA increased to $108 million from $46 million the previous year, and its free cash flow was reported at $114 million. The company’s user base continues to grow, with monthly active users reaching 900 million. Snap refrained from providing formal financial guidance for Q2 due to macroeconomic uncertainties but remains focused on expanding its user base and investing in AI and augmented reality technologies. Analyst firms like Piper Sandler and Barclays (LON:BARC) have shown interest in Snap’s strategic initiatives and market performance, highlighting the company’s focus on direct response advertising and user engagement.
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