Snap: Risk-Reward Looks Attractive To Initiate A Position


  • Snap reported strong Q1 FY24 earnings, with revenue growing 21% YoY and Adjusted EBITDA expanding, beating estimates.
  • The strength in revenue was driven by growth in advertising, with particular strength in DR growing 17% YoY, as the company continued to innovate its advertising platform to drive ROAS.
  • During the quarter, it saw its DAUs grow 10% YoY with growing engagement on the platform, coupled with SMB advertisers growing 85%.
  • While the decline in DAUs in North America is a concern given substantially higher ARPU compared to international markets, I believe the stock has sufficiently priced in the risk.
  • Assessing both the “good” and the “bad”, I am optimistic about the product innovation roadmap and growing operational discipline and believe it is attractively priced from a risk-reward perspective.

Collage of group of people using smart phones in city

We Are

Introduction & Investment Thesis

Snap (NYSE:SNAP) is a visual messaging application where Snapchatters (users) can interact using its features that include Camera, Visual Messaging, Stories, Spotlight, and more. The company has underperformed the S&P 500 and Nasdaq 100 YTD, although the stock rose close

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in SNAP over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Leave a Reply

Your email address will not be published. Required fields are marked *