Snapchat founder and CEO Evan Spiegel showcases a Pixy drone during an engaging session at the Viva Technology show in Paris on June 17, 2022.
Photo Credit: Eric Piermont | AFP | Getty Images
Snap
shares witnessed a substantial decline at the commencement of trading, with a staggering 19% drop, as both analysts and investors reacted to a disappointing forecast for the current period.
Total sales experienced a 4% year-on-year decline, along with a below-expectation sales forecast for the third quarter. Snap is often regarded as a benchmark for digital marketing expenditure, which has faced considerable challenges recently but is currently showing signs of a modest recovery.
Maintaining an underweight rating on this social media stock, Morgan Stanley has set a price target of $6.5. In a report on Wednesday morning, Morgan Stanley analyst Brian Nowak expressed concerns about the ongoing struggle with revenue and the increasing cost of competition for advertising dollars and engagement.
Bank of America analyst Justin Post has reiterated a neutral rating and a price target of $11. Bank of America stated that despite some indications of smaller advertiser traction, they prefer other stocks in the Online media group due to the pressure on Snap’s usage (time spent).
Since reaching a share price of over $73 in November 2021, Snap’s shares have plummeted significantly. The company has been grappling with a slowdown in daily active user growth in North America and has had to execute a workforce reduction of more than 1,000 employees, which accounts for 20% of its global staff.
Contribution by CNBC’s Michael Bloom.
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