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Snap Inc. Surges as TikTok Faces Turmoil

Matt MonacoAvatar
Written by Matt Monaco
Reviewed by Jack Kellogg Fact-checked by Tim Sykes

Snap Inc. shares are riding a wave of positive market sentiment following affirmation of revenue expectations as the digital advertising market rebounds, trading up by 4.87 percent on Wednesday.

Recent Developments

  • The looming TikTok ban in the US has opened doors for Snapchat to capture an increasing user base, as users seek alternative social media platforms.
  • A Supreme Court ruling against TikTok, demanding a separation from Chinese control for operations in the US, greatly benefits its competitors, including Snap.
  • President-elect Donald Trump’s push for a 50% U.S. stake in TikTok presents possible advantages for other social media companies.
  • Snap is potentially benefiting from a new advertising trend analysis expected from major analysts, focusing on 4Q performance across various platforms including Snap.
  • Ongoing discussions about the US government’s stance on TikTok’s future could be pivotal for Snap and its position in the social media landscape.

Candlestick Chart

Live Update At 17:21:29 EST: On Wednesday, January 29, 2025 Snap Inc. stock [NYSE: SNAP] is trending up by 4.87%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

Financial Snapshot: Recent Earnings Overview

As millionaire penny stock trader and teacher Tim Sykes, says, “The goal is not to win every trade but to protect your capital and keep moving forward.” This philosophy is crucial for traders navigating the volatile world of stocks. Focusing on capital preservation, rather than the pursuit of constant victory, allows traders to endure and thrive in the long term. By adhering to this principle, traders can avoid catastrophic losses and ensure that they can continue to participate in the market, learning and growing with each experience.

Snap Inc.’s financial journey has seen its ups and downs, much like a rollercoaster. The recent stock price movement can be tied closely to evolving market trends and financial performance specifics. The company’s revenue tops $4.6B, yet the challenge lies in their consistent profitability. Margins tell an interesting story, with a gross margin of 53.1%, but profitability margins indicate a different tale with negative figures across EBIT (-17.8%) and net income margins (-18.49%).

The recent stock surge correlates with the positive market developments surrounding TikTok’s uncertain status. Trading patterns have shown an upward trajectory in price, reaching new highs after previous lows. On Jan 24, Snap opened at $10.65, hitting a low of $10.65 before closing at $10.89. This paints a picture of a market reacting favorably to emerging opportunities.

From a broader lens, Snap’s balance sheet reveals total assets amounting to $7.59B, with a considerably high leverage ratio of 3.4. This leverage needs to be managed carefully. Their total liabilities stand at $5.38B contrasted with equity at $2.21B. Therefore, financial risk remains an aspect for investors to weigh.

More Breaking News

Interpretations from the latest quarterly earnings report underline a $1.37B operating revenue against $1.54B in expenses, resulting in a net income of -$153M. Snap’s journey towards profitability is akin to climbing a steep hill, used frequently to depict ongoing efforts to break even. There’s hope on the horizon as they continue to explore cost-cutting measures while capitalizing on rising user engagement post-TikTok’s ongoing woes.

Social Media Landscape: Snap’s Advantage

Amidst the social media shuffle, Snap stands to gain substantially as TikTok’s future in America hangs by a thread. A potential ban means a probable influx of displaced content creators and users, consequently increasing Snapchat’s user activity. This occurrence offers Snap a fresh sheet to write its expanding narrative. It reminds us of a small bakery timing its launch perfectly as a large neighboring bakery closes down, capturing all the wanderers in need of baked goods.

The dynamics of digital trends suggest a boon for Snap, an opportunity akin to sunlight seeping through the clouds on a rainy day. Should TikTok’s challenges solidify, marketers may divert their spend on ad campaigns towards platforms like Snapchat, a digital domino effect providing platform owners an unanticipated windfall.

Recent user trends indicate surges in engagement, reminiscent of yesteryears when new trends burst forth, driven more by necessity than choice. With TikTok’s struggles and potential US market withdrawal, Snap finds itself on the edge of something momentous. For investors and market watchers, Snap’s current market maneuvers might invite scrutiny akin to a gold rush, where early prospectors stand to gain the most.

Conclusion

Snap Inc.’s stock story is being written in real-time, as market forces shape its narrative against a backdrop of dynamic tech developments. User retention strategies coupled with newfound market space spell potential growth for Snap. The company’s million-dollar question remains: how effectively it will convert these opportunities into tangible growth.

As millionaire penny stock trader and teacher Tim Sykes says, “The goal is not to win every trade but to protect your capital and keep moving forward.” Traders who keep an eye on these ever-moving chess pieces will do well by understanding this confluence of events. Strong financial footings, addressing profitability, and leveraging new market conditions stand at the forefront. Whether aboard now or contemplating boarding, Snap is undoubtedly positioned in a pivotal chapter of its journey.

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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

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Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”