Cantor Fitzgerald’s Top Internet Stocks: Best Stocks To Buy According To $13.2 Billion Firm

20. Snap Inc. (NYSE:SNAP)

Number of Hedge Fund Holders In Q2 2024: 44

Share Price Target Upside: -14%

Cantor’s Rating: Neutral

Cantor’s Share Price Target: $8

Snap Inc. (NYSE:SNAP) is one of the more popular social media services, especially among young users. Its key differentiation when compared to peers such as Instagram is the ability of users to maintain their privacy while sharing their daily lives with friends. Yet, Snap Inc. (NYSE:SNAP)’s consumer centered model also means that the stock is vulnerable to cyclical downturns. Its primary source of revenue is advertiser spending, and this typically picks up when inflation is low and businesses are performing well. Consequently, Snap Inc. (NYSE:SNAP)’s shares are down 42% year to date and flat over the past twelve months. The stock has been quite volatile as well, as it dropped by 34% in February after Snap Inc. (NYSE:SNAP)’s fourth quarter 2023 results saw it miss revenue estimates of $1.38 billion by posting $1.36 billion and meeting analyst revenue guidance. However, the shares soared by 50% in April after its midpoint Q2 revenue guidance of $1.25 billion beat analyst estimates of $1.22 billion and optimism for sales of features such as direct advertising that are more stable than other advertising revenue.

Snap Inc. (NYSE:SNAP)’s management shared details for direct advertising during the Q2 2024 earnings call:

“The growth of our community, the progress we have made with our direct response advertising business, and the success of our Snapchat Plus subscription business that now reaches more than 11 million subscribers, all contributed to revenue growth of 16% year-over-year, despite the impact of a weaker brand advertising environment for certain consumer discretionary verticals. We are pleased with the ongoing progress made in our DR business as well as well as the continued rapid growth in the total number of active advertisers which more than doubled year-over-year in Q2. We believe this progress validates our strategy of focusing on growing our community and engagement, investing in our Direct Response advertising products, and diversifying our revenue growth with our subscription offering.”