Shares of Snap surge by almost 12 percent
Date
10/17/2023 8:20:48 AM
(MENAFN) Snap Inc. saw its shares surge by almost 12 percent on Monday in response to an internal memo from the company's CEO, Evan Spiegel. The memo, sent to employees in September, contained optimistic projections for Snap's performance in the coming years, hinting at better-than-expected results for 2024. According to the memo, Snap could achieve over 475 million daily active users in 2024, surpassing analysts' forecasts, which had estimated around 448 million users. Additionally, the memo suggested that Snap's full-year advertising revenue growth in 2024 could exceed 20 percent, while consensus expectations were slightly over 14 percent.
Snap confirmed the figures mentioned in the memo but emphasized that they were "stretch, internal goals only." The memo also outlined a target for the company's 2023 adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) to reach USD500 million, which, according to Bernstein analyst Mark Schilsky, would significantly exceed current analyst projections of USD250 million.
However, Schilsky cautioned Snap against disclosing such aspirational goals in internal memos, particularly as they tend to find their way into the public domain. He urged the company to refrain from making such forward-looking statements, emphasizing the importance of considering shareholder interests.
Snap has faced various challenges over the past year. Like other social media platforms, it grappled with adapting to changes in online advertising, particularly in the wake of Apple's 2021 iOS privacy update, which limited the effectiveness of user tracking for targeted advertising. Additionally, Snap contended with a challenging digital advertising landscape marked by the Russia-Ukraine conflict and businesses scaling back marketing efforts amid economic uncertainty. In July, Snap's shares plummeted by over 17 percent after the company's guidance for the current quarter fell short of analysts' expectations.
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