Why You Should Buy Snap Inc Stock Now
Snap Inc (NYSE: SNAP) is the parent company of Snapchat, one of the most popular social networking apps in the world. The company has been growing its user base and revenue despite facing stiff competition from Facebook, Instagram, and TikTok. Snap has also been innovating with new features such as Spotlight, Snap Map, and Snap Originals, which attract more engagement and monetization opportunities.
In this article, we will look at some of the reasons why you should buy Snap stock now and how it can benefit from the current market trends.
Snap’s Q1 Earnings Beat Expectations
One of the main reasons to buy Snap stock now is its impressive performance in the first quarter of 2023. The company reported revenue of $988.61 million, beating analysts’ estimates of $978.1 million. This represents a 6.97% year-over-year decline, but a 15% sequential increase from the previous quarter. The decline was mainly due to the impact of the COVID-19 pandemic on the advertising industry, which affected Snap’s core business.
However, Snap also showed strong growth in its key metrics, such as daily active users (DAUs), average revenue per user (ARPU), and operating cash flow. The company added 25 million DAUs in Q1, reaching a total of 375 million. This is a 7% year-over-year increase and a 4% sequential increase. Snap’s ARPU was $2.63, down 13% year-over-year but up 11% sequentially. The company’s operating cash flow improved by $131 million to -$49 million, compared to -$180 million in Q1 2022.
Snap’s CEO Evan Spiegel said that the company is “pleased with our results for the first quarter” and that it is “making progress on our key priorities for 2023”. He also highlighted the company’s investments in augmented reality (AR), content, and gaming as drivers of future growth.
Snap’s AR Platform Is a Game-Changer
Another reason to buy Snap stock now is its leadership position in the AR space. The company has been developing its own AR platform, called Lens Studio, which allows anyone to create and share AR experiences on Snapchat. The platform has over 200 million monthly active users and over 2 million Lenses created by its community.
Snap’s AR platform is not only a source of entertainment for its users, but also a powerful tool for advertisers and brands. The company has been partnering with various companies to create branded Lenses that showcase their products and services in an immersive way. For example, Snap recently teamed up with Adidas to launch an AR try-on experience for its shoes. Users can scan a QR code on their phone and see how different Adidas models look on their feet.
Snap’s AR platform is also a catalyst for its e-commerce ambitions. The company has been integrating its AR technology with its shopping features, such as Shop Now and Product Catalogs. Users can browse and buy products from their favorite brands directly on Snapchat, using AR to enhance their shopping experience. For instance, Snap partnered with Gucci to launch an AR try-on campaign for its sunglasses. Users can see how they look wearing different Gucci styles and buy them with a few taps.
Snap’s AR platform is a game-changer for the social media industry and gives it a competitive edge over its rivals. The company has been investing heavily in its AR capabilities and plans to launch more innovative products in the future, such as Spectacles 4, its smart glasses that can capture and share AR content.
Snap’s Valuation Is Attractive
The final reason to buy Snap stock now is its attractive valuation. The company’s stock price has fallen by more than 50% from its 52-week high of $30.19 in October 2022, due to the market volatility and the ad slowdown caused by the pandemic. However, this also presents an opportunity for investors to buy Snap stock at a discount.
Snap’s current market cap is $13.77 billion, which implies a price-to-sales ratio of 3.5 based on its trailing 12-month revenue of $3.94 billion. This is significantly lower than its peers in the social media space, such as Facebook (P/S of 8