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Is Snap a buy?

It’s time to talk about a social media giant. Here is the breakdown of $SNAP, otherwise known as Snap (Snapchat).

Current Price: $27.465

52/Wk High: $27.64

52/Wk Low: $7.89

Read below for the breakdown!

Snap is a camera and social media company whose core product is Snapchat, a social media and communication app that centralizes the use of a mobile device camera for social media and communication uses.

Snap generates revenue through advertising on their flagship application, Snapchat. When taking a look at Snap, the company's stock can be broken down into several segments.

According to TREFIS (@trefis) the Snap stock price itself can be broken down into three central segments. First, 51.1% of the stock price is based on North American Advertising.

Secondly, 41.4% of the stock price is based on International Advertising and 7.5% of the stock price is based on Cash positions and net debt.

Taking a look at users, Snap added 9 million users in the second quarter but missed the expected number of 10 million according to Motley Fool.

Digging into the numbers Snap has not yet turned consistently profitable but reported a Q2 earnings beat. Snap reported a beat for Q2, with an EPS of $-0.090 versus the expected EPS consensus estimate of $-0.091.

Furthermore, Snap’s revenue has been level throughout the last several segments. Snap’s Q2 revenue came in at $454 million, up from Q2 of last year by $66 million. On the other hand, Q2 saw slightly weaker revenue than Q1, when revenue was $462 million.

Taking a look at the balance sheet, the numbers could be better. When last reported, total debt sat at $1.626 billion and total cash on hand came in at a solid $2.830 billion as of June 30th.

When it comes to Q3, management would not provide official guidance, leaving investors in question as to what to expect in the upcoming quarter.

Given the mixed numbers, analysts are just as neutral. Currently, the average price target for $SNAP sits at $26.56/share, representing a -3.07% downside.

On the other hand, the high price target sits at $30.00/share, representing a 9.49% upside, while the low price target sits at $16.00/share, representing a -41.61% downside.

The big money is just as mixed as the analysts as well. Currently, 57.07% of Snap is owned by institutions. Top holders include Tencent Holdings, T. Rowe Price Associates, and The Vanguard Group.

Exploring the charts, Snap has been on fire of late. Currently, according to the six-month charts, the MACD sits in a range of 0.8276 up to 1.05, with a large upward momentum.

Not only that, but the six-month RSI sits at 71.1 and has been trending up for several weeks. Finally, the six-month CCI sits at a high 158.37 and Snap currently trades .22 points off its 52/Wk high.

It is also important to note that Snap currently trades at a market cap of $1.2 billion and a price to sales ratio of 20.35 times.

Overall, Snap is a solid company but the clear leader in the social media space continues to be $FB.

Given how far Snap has run throughout the past few months, $SNAP continues to be a solid long-term investment but I urge caution in the near term.


Disclaimer: This is not direct financial advice, simply opinion based on independent research.

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