Snap’s stock woes reflect weak fundamentals as the camera company struggles with macroeconomic uncertainties, its inability to attract substantial ad revenues, and increasing competition.
Snapchat parent Snap, Inc.’s (SNAP) shares rose over 9% in overnight trading, Yahoo Finance showed, as retail chatter about a potential buyout gained momentum among traders. Snap stock was also on investors’ radar amid the geopolitical developments surrounding the fate of the U.S. unit of TikTok, owned by China’s ByteDance.
On Stocktwits, retail sentiment toward Snap stock remained ‘extremely bullish’ (83/100) by late Sunday, and the message volume on the stream was at ‘high’ levels. The stock was the top-trending equity ticker on the platform.
A bullish retail watcher on the platform noted the stock’s gain over the past week and reasoned that it could have been due to rumors surrounding the company.
The stock jumped over 11% last week, accompanied by a surge in trading volume, which was more than double its three-month volume in all five sessions. Nevertheless, Snap’s stock is down over 24% for the year, even as the tech-focused Invesco QQQ Trust (QQQ) traded up over 17%.
Snap’s woes reflect weak fundamentals as the camera company struggles with macroeconomic uncertainties, its inability to attract substantial ad revenues, and increasing competition. Following the company’s quarterly results in early August, the stock snagged a slew of price target cuts from Wall Street firms, according to The Fly.
Analysts blamed their actions primarily on weak direct response revenue, which was partly due to a change that allowed ad campaigns to clear auctions at substantially lower prices, as well as a minor adjustment. Piper Sandler expressed apprehension due to shareholder dilution and a lack of profitability improvement.
Another Stocktwits user speculated that a “partnership is coming.”
Some also flagged a meme stock-like surge, just like GameStop or AMC, driven by a short-squeeze rally.
According to Koyfin data, the short interest in the stock is at 8.50%, the highest since early 2020.
But a few users are also optimistic about the company’s fundamentals, noting that the company has unveiled OS 2.0 and an augmented reality (AR) glasses update.
An email presented at the Meta antitrust trial earlier this year showed that Mark Zuckerberg had made a $6 billion buyout offer for Snap in 2013 but was snubbed.
The attention that Snap received was also due to TikTok buyout talks. While President Donald Trump has reportedly extended the deadline for banning TikTok in the U.S. company to December 16, it is rumored that multiple parties, including Oracle, Silver Lake, Andreessen Horowitz, and News Corp. (NWS), are interested in buying out the app.
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