Snap shares experienced a significant boost of nearly 12% on Monday, driven by reports of an internal memo from CEO Evan Spiegel. According to the memo, the social messaging company is anticipating better-than-expected results for 2024. Spiegel informed employees in a September memo that Snap could potentially achieve over 475 million daily active users in 2024, surpassing analysts’ projections of 448 million. The positive outlook indicates a promising future for Snap and has instilled confidence in investors.
In addition to its user growth projections, the memo also highlighted Snap’s full-year advertising revenue growth for 2024. The memo suggests that the company’s advertising revenue could grow by more than 20%, outperforming the consensus expectations of just over 14%. Bernstein analyst Mark Schilsky noted in his Tech Specialists newsletter that Snap’s projected growth rate is significantly better than anticipated. This revelation has fueled optimism among investors, leading to a surge in Snap’s stock price.
The internal memo further outlined Snap’s ambition to achieve an adjusted EBITDA of $500 million by 2023. This target represents a substantial beat compared to current analyst projections of $250 million. However, it is worth noting that Snap officially characterized these figures as “stretch, internal goals only.” While it is commendable for Snap to set high aspirations, some industry experts, including Schilsky, have cautioned against revealing such goals in employee memos. The leakage of such information can affect market sentiment and create undue pressure on the company to deliver on these ambitious targets.
Snap’s journey has not been without hurdles. Similar to other social media firms, including Meta and Pinterest, Snap has faced challenges in improving its online advertising system, primarily due to Apple’s 2021 iOS privacy update. The update limited the effectiveness of tracking users for targeted ads. Additionally, Snap has operated in a difficult digital advertising economy, as geopolitical tensions and economic uncertainties, such as the Russia-Ukraine war, have led many companies to reduce their marketing budgets.
Earlier this year, Snap shares experienced a significant decline of more than 17% after the company provided guidance for its current quarter that fell short of analysts’ expectations. However, with the recent leak of its strong growth projections, the sentiment towards Snap has started to shift. The stock, which was previously trading near its lows, now has renewed potential to recover. The digital advertising market is also performing well, presenting a favorable environment for Snap to capitalize on its growth opportunities.
Snap’s latest internal memo revealing promising growth projections for 2024 has sparked optimism among investors. The company’s anticipated increase in daily active users and advertising revenue growth has created a positive outlook for Snap’s future. While challenges remain in navigating the competitive landscape and the impact of external factors, Snap has shown resilience and potential for rebounding from previous setbacks. As the company progresses, investors will closely monitor Snap’s performance to see if it can deliver on its ambitious goals and maintain its upward trajectory.
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