Snap Share Price Forecast September 2021 – Time to Buy SNAP?
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Shares of American camera and social media company Snap (NYSE: SNAP) is in the red today after closing at $71.76 as of September 29th (20:53 UTC-4). The Snapchat owner initially surged when it released its 2nd quarter earnings in July and its comeback has been fuelled by the innovations and new products that the company has come up with.
Snap – Technical Analysis
According to the financial statement released by Snap, the market cap of the company is at $113.46 billion with total assets worth $6.821 billion. Revenue from 2020 was at $2.51 billion with a profit margin of -37.69% compared to revenue of $1.72 billion in 2019.
Oscillators for Snap such as Relative Strength Index (14)(44.67), Stochastic %K (14, 3, 3)(41.42), Commodity Channel Index (20)(−94.87) and Average Directional Index (14)(16.93) are neutral. On the other hand, moving averages such as Exponential Moving Average (10)(75.97), Simple Moving Average (10)(76.24), Exponential Moving Average (20)(75.38), Simple Moving Average (20)(75.08) are all indicating a selling action.
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Recent Developments
Snap released its second-quarter numbers which indicated that their revenue in daily active users was growing at the fastest pace in the last 4 years. Daily active users grew up by 23% to reach 293 million with revenue more than doubling, reaching 116% to $982 million crushing expectations of $845 million. Adjusted EBITDA more than tripled to reach 117 million and GAAP net loss was down by 3%. All of these metrics indicate that the company is underestimated.
Snap spends about 30-40% of their revenue on R&D which is much higher than their peers. They are a leader in artificial reality as well, as they are using AR applications with their Lens Studio application. There are about 200,000 creators who use Lens Studio to build AR lenses. More than 175 million Snapchatters now use Scan which allows them to identify things like dog breeds, plants, or use it for recipes and fashion further increasing their position in the industry.
Daily active users for Snap chat grew by 22% to reach 265 million in 2020 and grew by another 23% this year to reach 293 million as of the second quarter of 2021. Snap shares received a boost from investors, reaching fresh highs this year due to its strong sequential growth in the first two quarters of the year. Compared to its peers, Snapchat’s growth has been smoother due to its augmented reality (AR) lenses, and play in-app games and other engaging features.
Should You Buy SNAP Shares?
The global digital advertising market has hundreds of billions of dollars spent every year. Marketers are always on the lookout for the highest return on investment on their ad spend. Snap fits the bill perfectly as it has an engaged user base. This is one of the reasons why investors should take the company’s massive market opportunity seriously. As it’s growing its top line at staggering rates in a massive market, the company is winning over several investors. This is further helped by a trailing 12-month revenue increase of 73% year over year.
The company’s market opportunity and top-line growth do a great job of showing investors why Snap is a good bet on the half-trillion-dollar digital advertising sector. But there is an even bigger reason that investors should be interested in Snap: its impressive user engagement. It is competing with the likes of Facebook when it comes to year-over-year growth. Considering all of this, investors can pick up SNAP shares right now but should expect some volatility along the way.
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