The Snap stock price is going nuts this morning as it became the most actively-traded stock on the major U.S. exchanges. Volumes soared past 45 million shares early, although the average daily volume is closer to 25 million.
There’s no predicting the Snap stock price
This is one stock that’s truly hard to predict right now, as one would have thought that it would plunge today, as it did initially. Company employees are finally able to unload some of their shares after the lockup periods from the initial public offering and then earnings. The lockup expiration means nearly 800 million shares are now available for trading. It’s the second lockup expiration in two weeks, as about 400 million insider-owned shares were unlocked for trading at the end of July. Meanwhile, regulatory filings reveal that more high-profile shares are dumping their positions.
Here’s a round up of hedge funds’ May returns
Tyro Absolute Return Fund was down 1.5% for May. The fund's main contributors in May were Super Micro Computer, which gained 1.6%, Shyft Group, which was up 1%, and GCI Liberty, which gained 1%. Detractors in May include Recro Pharma, which fell 2.6%, index shorts and hedges, which declined 2%, and DXC Technology, which was Read More
The Snap stock price tanked on Thursday after the company missed estimates, but many analysts are perennially optimistic. Some pronounced the results “good enough,” while others used phrases like “better-than-feared.” One firm slashed its target for the Snap stock price casually last week while still trying to make the company’s results seem fine.
Nonetheless, investors weren’t buying any of it. Today is the deadline for institutional investors to report their U.S. equity holdings as of the end of the second quarter. Regulatory filings reveal that Dan Loeb’s Third Point and Temasek Holdings, a wealth fund owned by the Singaporean government, exited the Snapchat parent entirely
Snap stock price rebounds after diving to new low
The Snap stock price plunged to a new low of $11.28 today before bouncing after hitting setting the previous low on Friday despite analysts’ best efforts to convince investors that there’s a light at the end of the tunnel. Analysts are generally convinced that the second half of the year will be better than the first half.
Two of the Street’s biggest concerns are daily active users and engagement, and Drexel Hamilton analyst Brian White pronounced the company’s 7.3 million sequential user growth as “good enough given Snap’s model.” That marked a 21% year over year growth rate to 173 million, although White feels that the daily user metric “is less relevant” for Snap. The reason is because Snapchat users must have a “high-end smartphone and a high-speed mobile network to fully leverage the Snapchat platform.”
Deutsche Bank analyst Lloyd Walmsley expects much greater growth and engagement in the third quarter, citing the increase in hosting costs for Snap Maps toward the end of the second quarter. He cited strong engagement of more than 40 minutes for the under-25 demographic, compared to about 40 minutes for Instagram. The over-25 group spent more than 20 minutes on Snap, versus about 20 minutes at the time of the IPO.
Deep cut to Snap stock price target
On Friday, Jefferies analyst Brian Fitzgerald sliced his Snap stock price target nearly in half, moving from $30 to $16 per share, although he maintained his Buy rating. He feels that “patient investors should look through the noise at the long term opportunity.”
He warned that pricing will remain week for now and that the company’s stock will be pressured by the lockup expiration, although as of this writing, the stock has bucked the typical trend. He also feels that Snap is doing a “disservice to shareholders” by refusing to provide guidance because it will cause estimates to “fluctuate wildly and it introduces unneeded uncertainty into results.”
However, he added that his long-term thesis remains intact because engagement is rising and the company serves a “huge” total addressable market “that is underserved by only two major players.” Interestingly, he sees a potential range of only $8 to $22 for the Snap stock price.
Snap stock price targets slashed by multiple firms
Most of the post-earnings price target cuts for Snap were much less dramatic than Jefferies’ cut. Credit Suisse analyst Stephen Ju cut his target price for Snap from $25 to $17 per share and reiterated his Outperform rating after the company’s earnings report. He believes this will be the last downward revision to estimates for the company. He believes management commentary about third-quarter seasonality due to the Olympics and Elections during the third quarter was aimed at managing expectations.
Cantor Fitzgerald analysts also trimmed their Snap stock target price, moving from $17 to $15 per share and remaining on the sidelines. They want to see a reacceleration in user growth and “an inflection” on pricing.