Fannie Mae, Freddie Mac shares tumble after conservatorship comments
On Friday, Loop Capital Markets made an adjustment to Snap Inc ’s (NYSE:SNAP) financial outlook. Analyst Alan Gould lowered the price target on the social media company’s shares to $12.00, down from the previous target of $16.00. Despite the reduction, the firm has kept a Buy rating on the stock. According to InvestingPro data, Snap currently trades at $8.58, with analyst targets ranging from $6.50 to $15.00. The company appears undervalued based on InvestingPro’s Fair Value model.
Gould’s decision to revise the price target stems from a change in the sales multiple used for valuation, now at 2.5 times sales, a decrease from the earlier 4 times sales. The adjustment reflects a more conservative stance on the company’s market performance potential. The company currently trades at 6.2 times book value, while 16 analysts have recently revised their earnings expectations downward, according to InvestingPro data.
Snap has experienced challenges since Apple (NASDAQ:AAPL)’s privacy changes in 2022, which have led to what Gould refers to as "turnaround trap" scenarios, with Snap’s shares showing temporary surges that did not sustain. Despite these issues, Gould maintains a Buy rating, citing the substantial and consistent user base of Snapchat as well as the significant opportunities for revenue growth through better monetization strategies. InvestingPro data shows the company achieved 14.91% revenue growth in the last twelve months, with an overall Financial Health Score of "Fair."
The near-term uncertainties and Snap’s decision not to provide guidance have contributed to the pressure on the stock’s performance. However, Gould expresses optimism about the company’s core business, noting improvements in the underlying fundamentals. Discover more insights about Snap’s valuation and growth potential with InvestingPro, which offers exclusive access to over 30 key financial metrics and professional analysis.
Loop Capital encourages investors with a contrarian approach to consider accumulating Snap shares at current levels, which are seen as highly undervalued. Gould’s commentary underscores a belief in the company’s resilience and potential for recovery, with InvestingPro analysis indicating expectations for net income growth this year.
In other recent news, TikTok, owned by ByteDance, has been fined 530 million euros ($600 million) by the EU’s privacy regulator over data protection concerns. The regulator criticized TikTok for not adequately protecting EU user data and raised issues about data transfers to China, demanding compliance within six months. TikTok plans to appeal the ruling, arguing that it has implemented data security measures in line with EU standards. Meanwhile, Snap Inc. has seen significant developments, particularly in its advertising technology. Benchmark and Stifel both maintained their Hold ratings on Snap, with Benchmark noting the overhaul of Snap’s direct response advertising technology, which now comprises 75% of its revenue. Stifel highlighted Snap’s first-quarter performance, which exceeded expectations, although concerns remain about advertising revenue clarity. Cantor Fitzgerald adjusted its price target for Snap to $7.00 from $8.00, citing macroeconomic uncertainties despite Snap’s growth in daily active users and content consumption. These recent developments reflect the ongoing challenges and strategic adjustments faced by both TikTok and Snap in the current economic and regulatory landscape.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.