By Senad Karaahmetovic
Loop Capital analyst Rob Sanderson maintained a Buy rating and a $26 per share price target on Snap (NYSE:SNAP) shares.
The analyst took note of the extreme selloff in Snap shares as they trade “like the bull case is broken.” However, Sanderson sees potential for Snap shares to rally in the near term if “the outlook is not as bad as consensus.”
“We do expect continued strength in users and a greater focus on expense reductions, both fundamental positives,” he added in a client note.
In the opposite scenario, the analyst says investors should use the opportunity to build positions on weakness as the long-term story is still intact.
“Snap’s user community is strong, among the fastest-growing, and has deep penetration within a demo coveted by marketers. Snap has a long track record of innovation leadership. Snap’s revenue growth is still well above industry and among the fastest. Snap has meaningful untapped inventory in Spotlight. Snap has technology leadership in AR and is beginning to monetize. The Snap Map is another untouched surface that provides years of monetization expansion,” Sanderson explained.
Finally, the analyst says Snap shares could hit $85 by 2026 and could potentially “return 50% per year for 4.5 years.”
“If monetization rates continue to where Facebook (NASDAQ:META) is today, our framework suggests that Snap’s market cap could expand by 8-10x by the 2029-2030 timeframe.”