Should you buy, sell or hold SNAP stock at $12?

Snap shares Shares of (NYSE: SNAP) rose more than 10% after market close on Tuesday, October 29, after the company reported upbeat third-quarter results. Snap reported revenue of $1.37 billion and adjusted earnings of eight cents per share, better than consensus estimates of $1.36 billion and six cents, respectively. In this note, we discuss key takeaways from Snap’s recent results, its valuation, and its stock performance.

How did Snap perform in the third quarter?

Snap Revenue The $1.37 billion in the third quarter reflected 15% year-over-year growth driven by strong paid subscriber growth. Snapchat+’s member base has reached 12 million subscribers, more than doubling from last year. Daily active users grew 9% to 443 million, and average revenue per user of $3.10 increased 6% year-over-year. Both DAU and ARPU were also better than street vendor estimates. Snap’s adjusted EBITDA margin increased 700 bps. compared to the same period last year to 10% in the third quarter of 2024. Higher revenues and improved margins pushed adjusted earnings up to $0.08 per share, up from $0.02 in the prior-year quarter.

Looking ahead, Snap expects fourth-quarter sales of $1.51 billion to $1.56 billion and adjusted earnings of $210 million to $260 million. The midpoint of the earnings range is better than consensus estimates for the fourth quarter. In addition, the company also announced a $500 million share repurchase program.

What does this mean for SNAP stock?

With an upbeat quarter, better-than-expected earnings guidance and a share buyback plan, the company ticked just about every box to please investors. Unsurprisingly, the share price rose during aftermarket hours.

We evaluate Snap rating will be $13, which is close to the current level of $12. Our forecast is based on 4x trailing earnings, which is in line with the stock’s average P/S ratio over the last four quarters.

SNAP stock has lagged other markets, down 29% this year compared with the S&P500’s 22% gain. Even if we look over a slightly longer period, changes in SNAP stock over the past three-year period have been far from consistent, with year-over-year returns being significantly more volatile than the S&P 500. SNAP stock has returned -6% in 2021. , -81% in 2022 and 89% in 2023. On the contrary, Trefis High quality portfoliowith a set of 30 stocks, is significantly less volatile. And it has outperformed the S&P 500 every year for the same period. Why is this? As a group, HQ Portfolio stocks delivered higher returns with less risk compared to the benchmark index; less of a roller coaster ride as seen in Headquarters Portfolio Performance Indicators.

While SNAP stock looks reasonable right now, it’s useful to look at how Analogues of Snapchat tariff according to important indicators. You will find other valuable comparisons of companies from different industries on the website Comparison of analogues.

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