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Analyst: Snap’s Lockup Could Be A ‘Bottoming Event’ For The Stock, Not A ‘Negative Event’

Courtesy of Benzinga.

Analyst: Snap's Lockup Could Be A 'Bottoming Event' For The Stock, Not A 'Negative Event'

Shares of Snap Inc (NYSE: SNAP) briefly traded in positive territory on Monday as investors reacted, clearly nervous over the stock’s lockup expiration. But investors who are looking at the expiration as a negative event may be wrong in their thinking, at least according to Canaccord Genuity’s Michael Graham.

A lockup period more often than not represents a “bottoming event” for stocks, rather than a “negative event,” Graham said during CNBC’s “Squawk Alley” segment. Granted, there has been a lot of negative sentiment heading into the lockup expiration and this sentiment is likely to stretch out until the company’s earnings report in two weeks.

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“The more important thing for Snap is to show some execution when they report next Thursday,” the analyst said. “The two most important fundamentals are user growth and revenue.”

Snap did “somewhat disappoint” the Street in its first ever earnings report in terms of user metrics, and the stock could bounce back if management delivers strong numbers. The problem is that as a social media company, Snap will be reporting similar metrics to what Facebook Inc (NASDAQ: FB) reports.

But Snap’s woes are even bigger when considering that when Facebook was a mere two quarters into its life as a public company, it didn’t have to deal with the intense competitive landscape which exists today.

For example, around 250 million Instagram users make use of the Stories feature which compares to Snap’s total daily active user base of around 168 million, the analyst added.

“That’s a real competitive headwind that Snap faces,” he concluded.

Related Links:

Paul Meeks, Mark Mahaney Talk Snap’s Lockup Expiration

Social Q2s: Facebook Rules, Twitter Drools, Snapchat Starting To Lose Its ‘Cool’?

Latest Ratings for SNAP

Date Firm Action From To
Jul 2017 OTR Global Downgrades Positive Mixed
Jul 2017 Cowen & Co. Downgrades Outperform Market Perform
Jul 2017 Stifel Nicolaus Upgrades Hold Buy

View More Analyst Ratings for SNAP


View the Latest Analyst Ratings

Posted-In: Analyst Color CNBC Earnings News Previews Events Analyst Ratings Tech Best of Benzinga


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