Snapchat (SNAP) - ★★★★★ - Ranked #2 in our Q2 2024 SMID Equity Rankings
Snap Inc.'s stock skyrocketed nearly 30% during intraday trading on Friday, reaching an intraday high of $14.88 after the company reported blowout first-quarter earnings results after market close on Thursday. The social media company's shares closed at $11.40 on Thursday before the earnings release.
The massive stock surge validates our team's highly optimistic outlook on Snap. In our Q2 2024 SMID Equity Rankings released on March 13th, we ranked Snap #2 with an "ultra positive" 5-star outlook. When Snap was trading at $11.85 on March 13th, we set a 12-month price target of $15 for the stock - a 26% upside from its price at the time. Today's intraday high of $14.88 puts Snap remarkably close to achieving our bullish target just over a month later.
Our optimism in Snap paid off for subscribers who followed up on our insights and options trading diary. Our subscribers gained access to the exclusive insight to buy Snap call options ahead of earnings, which gained around 20% in value leading up to today's post-earnings rally. Although, we sold those June 21 2024 call options one week prior to earnings for the 20% gain those investors who chose to hang around were handsomely rewarded as those call options are up 120% in today's trading alone.
Snap crushed Wall Street's expectations in Q1, reporting earnings per share of 3 cents compared to analysts' consensus estimate of a 5 cent loss. Adjusted EBITDA soared to $46 million from just $1 million in the prior year period. Revenues of $1.195 billion beat the $1.12 billion consensus by 6.7% and grew 20.9% year-over-year.
The stellar results were driven by strong user growth and new product innovation. Daily active users jumped 10% year-over-year to 422 million. Snap highlighted new features like longer video posting, AI-powered AR lens creation tools, and the rapid expansion of its Snap Stars creator program which saw over 1,500 new creators onboarded in Q1.
Looking ahead, Snap guided for Q2 revenues between $1.225-$1.255 billion, indicating its current momentum is likely to continue. The company's blowout performance and upbeat outlook sent shares skyrocketing today as the market rewarded this extremely undervalued social media innovator.
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