Snap Inc, the parent company of popular social media platform Snapchat, witnessed a notable surge in its stocks, experiencing an 11% upswing on Monday. This surge in the stocks of Snap followed a media report hinting at the company’s ambitious target of surpassing 475 million daily active users by the year 2024.
As reported by The Verge on Friday, an internal memo from Snap CEO Evan Speigel to employees disclosed this optimistic projection, eclipsing Visible Alpha’s prior estimate of 447 million users. This revelation brings a breath of fresh air for Snap Inc., which has been grappling with challenges in a fiercely competitive advertising market.
In tandem with these lofty user aspirations, the report also indicates Snap’s anticipation of a remarkable surge in advertising revenues, exceeding 20% growth in 2024. This figure notably outstrips Wall Street’s conservative estimate of a 14% increase, gleaned from comprehensive surveys and calculations. Snap led the charge among major ad-dependent social media companies in warning of an impending decline in demand, citing a complex interplay of macroeconomic factors, including soaring inflation rates and elevated interest rates. These conditions culminated in an eighty percent plummet in stock valuation.
Although Snap’s projections might appear conservative to some, Bernstein analyst Mark Schilsky, while deeming them “incredibly low,” conceded that achieving these targets would likely result in a substantial surge in stock value. At present, Snap stands on the cusp of achieving one of its nine established benchmarks, aiming to enhance the time its daily users dedicate to consuming content by a minimum of 10%. The company, however, refrained from providing commentary on the report.
The veracity of this optimistic outlook remains an open question as Snap, along with other technology companies reliant on advertising revenue, continues to grapple with the uncertainties of a volatile economic landscape.
Source: Reuters
