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When Should You Buy Snap Inc. (NYSE:SNAP)?

Simply Wall St ·  May 25 20:28

Today we're going to take a look at the well-established Snap Inc. (NYSE:SNAP). The company's stock    led the NYSE gainers with a relatively large price hike in the past couple of weeks.   Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again.     As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company's outlook is already priced into the stock.  However, what if the stock is still a bargain?  Let's examine Snap's valuation and outlook in more detail to determine if there's still a bargain opportunity.    

What Is Snap Worth?

Good news, investors! Snap is still a bargain right now.  Our valuation model shows that the intrinsic value for the stock is $23.31, but it is currently trading at US$15.22 on the share market, meaning that there is still an opportunity to buy now.   What's more interesting is that, Snap's share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.    

Can we expect growth from Snap?

NYSE:SNAP Earnings and Revenue Growth May 25th 2024

Future outlook is an important aspect when you're looking at buying a stock, especially if you are an investor looking for growth in your portfolio.   Although value investors would argue that it's the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price.    Snap's earnings over the next few years are expected to increase by 94%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.  

What This Means For You

Are you a shareholder? Since SNAP is currently undervalued, it may be a great time to  accumulate more of your holdings  in the stock. With  an optimistic  outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as  financial health  to consider, which could explain the current undervaluation.

Are you a potential investor? If you've been keeping an eye on SNAP for a while, now might be the time  to make a leap.  Its  prosperous  future outlook isn't fully reflected in the current share price yet, which means it's not too late to buy SNAP. But before you make any investment decisions, consider other factors such as  the strength of its balance sheet,  in order to make a well-informed  buy.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing.   In terms of investment risks, we've identified 3 warning signs with Snap, and understanding them should be part of your investment process.  

If you are no longer interested in Snap, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

The above content is for informational or educational purposes only and does not constitute any investment advice related to Futu. Although we strive to ensure the truthfulness, accuracy, and originality of all such content, we cannot guarantee it.
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