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Is Snap Stock Ready to Slide or Climb? Experts Weigh In

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Written by Timothy Sykes
Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs

Snap Inc. shares are experiencing an upswing as the company gains momentum from positive user growth and enhanced advertising strategies, leading to its stocks trading up by 8.31 percent on Tuesday.

Recent Updates Memorable Events

  • JMP Securities gave Snap stock a boost, upgrading it to ‘Outperform’, suggesting optimism in its advertising potential.
  • Snap is testing new ways to advertise, partnering with big names like Disney, McDonald’s, and Taco Bell to integrate ads in the app.
  • Snapchat’s new ‘Footsteps’ feature is expanding to all iOS users, potentially increasing user engagement.

Candlestick Chart

Live Update at 16:03:16 EST: On Tuesday, October 29, 2024 Snap Inc. stock [NYSE: SNAP] is trending up by 8.31%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

Snap’s Recent Earnings Snapshot

Snap’s stock has shown some twists and turns lately. It opened at $10.75 and closed at $10.89 on Oct 29, 2024, marking a slight upward move. This shake-up is more than what meets the eye. Diving into the past week, Snap’s stock painted a colorful picture with highs near $10.93 and lows tipping at $10.06. This might feel like riding a roller coaster with unexpected dips and thrills.

When examining Snap’s financial health, it seems like a mixed bag. Snap marked a total revenue of over $4.6B and boasts a current ratio of 4. This suggests that the company sits on a healthy pile of liquid assets, meaning it’s got good bones, financially speaking. However, those bones must bear the weight of a hefty total debt to equity ratio of 2.05, much like a seesaw balancing two kids – it needs to handle things cautiously.

More Breaking News

The profitability aspects don’t shine as brightly. Snap appears to struggle here, with negative profit margins like a shadow hovering over its earnings. Its pretax profit margin is dragging behind at -26.5, similar to a turtle trying to win a race. And let’s not forget the profit margin lingering at -23.39, which might cause concern for some investors. Still, the gross margin stays positive at 53%, hinting at potential avenues for growth.

Deciphering News and Its Financial Dance

Snap has been bustling with activity. The market got a boost when JMP Securities upgraded Snap to ‘Outperform.’ This sparked hopes among many that Snap was ready to impress with its new advertising strategies, such as ‘Sponsored Snaps’ and ‘Promoted Places.’ This turnaround looks like an artist returning to their palette, ready to paint a masterpiece by blending in with major brands like Disney and Taco Bell.

Then there’s the ‘Footsteps’ feature, previously a perk for only Snapchat+ subscribers, now opening its doors to all iOS users. It’s like offering a scoop of high-end gelato for free to attract more flavor enthusiasts. This move may just up their user engagement game.

Despite positive strides, Wells Fargo showed a touch of caution by lowering Snap’s price target from $15 to $14 while maintaining their ‘Overweight’ rating. It’s a nod of acknowledgment that while Snap has promise, the path to consistent earnings and heightened engagement is filled with potential hurdles.

Past financial statements tell a tale where Snap grappled with a negative net income from continuing operations, clocking in at a loss of $248.62M in Q2 2024. It’s like preparing for a sprint, but a misstep causes a tumble. Still, there’s potential for Snap, especially its redemption through fancy footwork in advertising innovations.

Examining Trends and Market Effects

The strategic moves Snap is making could serve as a beacon of change. Industry experts argue that these new advertising tries could be just the pivot Snap needs, one comparable to turning the tide in a high-stakes chess game. But, the true measure comes from user reactions and how much advertisers are ready to invest in these new ad placements.

The jamboree of new features and partnerships signifies a broader strategy to retain and maybe even expand its user base, akin to planting seeds for a garden of future growth. However, skepticism does arise, particularly concerning Snap’s upcoming Q3 earnings call on Oct 29, 2024. Investors may tune in to assess if Snap’s artistic strokes in its strategies will match the expectations or if there’s still some distance to cover.

On the whole, Snap’s portrayal in the market is an unfolding story. As it tests new advertising territories and navigates its financial roadmap, it seems Snap is gearing up to paint its canvas with brighter hues. Whether investors decide to hold their brushes aloft or step back depends largely on how effectively Snap demonstrates its moves leading to shareholder value.

Conclusion: Bet on the Artist or Wait and See?

As Snap reveals its next chapters, investors should see beyond the surface and delve deep into Snap’s strategic expansion and earnings. The path ahead looks promising yet riddled with unknowns, much like wandering through a forest waiting to discover hidden treasures. With Jump’s favorable nod and Snap’s creative tries, the anticipation is alive, but whether Snap will dance seamlessly or stumble remains a captivating mystery of the market.

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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

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Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”