On Tuesday, Snap stock gained 5.9% and closed at $24.81 with a market cap of $36.2 billion. The stock rose following reports that the US might ban TikTok, which is a Chinese-owned social media app.
According to a CNBC report, “TikTok, operated by tech giant ByteDance, allows users to create short videos and overlay voices or music and has surged in popularity over the past year. In April, the app surpassed 2 billion downloads, according to Sensor Tower.” The report also said, “The banning of TikTok could provide some competitive relief to social media platforms, such as Snapchat and Facebook, Morgan Stanley’s Sales team wrote Tuesday morning.”
Snap’s growth projections
In the first quarter, Snap posted an adjusted EPS of -$0.08 compared to -$0.10 in the first quarter of 2019. The adjusted EPS missed analysts’ consensus estimate of -$0.07. Snap generated sales of $462.48 million—a growth of 44.3% from the same quarter a year ago. The social media company beat analysts’ consensus sales expectation of $428.8 million.
Wall Street analysts expect Snap to post an adjusted EPS of -$0.10 on total revenue of $431.9 million in the second quarter. Analysts also expect the company’s sales to increase by 22.8% YoY (year-over-year) in 2020 to $2.1 billion. The sales could rise by 38.2% YoY in 2021 to $2.9 billion. Meanwhile, the adjusted EPS would fall from -$0.16 in 2019 to -$0.20 in 2020. Analysts also expect an adjusted EPS of $0.12 in 2021.
Analysts’ target price and recommendations
Among the 40 analysts tracking Snap stock, 25 recommend a “buy,” 13 recommend a “hold,” and two recommend a “sell.” Analysts’ mean 12-month target price on the stock is $20.04, which implies a 19.2% loss from the current level of $24.81. The consensus 12-month target price for the stock has risen from $17.89 in June—a growth of 12.0%.
Snap stock is trading 3.0% below its 52-week high of $25.58 and 214.5% higher than its 52-week low of $7.89. On a year-to-date basis, Snap stock has risen by 51.9% as of Tuesday.
Based on the closing price on Tuesday, Snap stock was trading 10.3% above its 20-day moving average of $22.50. The stock is also trading 25.4% above its 50-day moving average of $19.79 and 50.7% above its 100-day moving average of $16.46. Snap’s 14-day relative strength index score is 71, which suggests that it’s overbought.
Snap stock has a lower Bollinger Band level of $19.67, while its middle Bollinger Band level is $22.51. On Tuesday, the stock closed near its upper Bollinger Band level of $25.34, which also indicates that the stock is overbought.
On Tuesday, the Dow Jones Industrial Average fell by 397 points or 1.51%. The S&P 500 and the Nasdaq Composite declined 1.08% and 0.86%, respectively.
Read Buying Snap Stock after the Zynga Deal: 2 Tips for Investors and Why Are Snap’s Q1 Earnings Impressive? to learn more.