Why the Drop In SNAP Stock Today Won’t Last

SNAP stock - Why the Drop In SNAP Stock Today Won’t Last

Source: dennizn / Shutterstock.com

Shares of Snap (NYSE:SNAP) stock are down today on news that the company has a wide gender gap regarding income for Snap employees in the United Kingdom. Data released by the company showed that Snap “paid women in Britain 53% less than men when judging median hourly wages.”  

Among U.K. tech rivals, Snap is not alone in having a gender gap. Many companies also lag the country’s average. Nevertheless, with ESG initiatives moving to the top of investor’s radars, it is not surprising to see some investors selling positions in SNAP stock.  

Perhaps there’s some profit taking at work as well. SNAP stock was up at one point 30% in the last 30 days. And even with the recent downturn, the stock remains up 43% from the 52-week low hit in February. And many of the same catalysts that were in place then remain in place today. One such catalyst is augmented reality. Snap CEO Evan Siegel recently remarked that “[o]ver 200 million people engage with augmented reality on Snapchat every day, and our community now plays with AR Lenses an average of more than six billion times per day.”

 

One catalyst investors shouldn’t put much credence on is Elon Musk’s recent investment in Twitter (NYSE:TWTR). While that news did cause all social media stocks to climb, ultimately that news is about broader issues in the public theater. If SNAP stock is to rise, it will have to prove that it is strong on its own merits. With that said, analysts give Snap a $57.53 consensus price target, which is over 65% higher than its current price. And institutional buying has remained steady and is growing over the past several quarters. 

The social media company is under pressure for a variety of reasons. Meta Platforms (NASDAQ:FB) posted a decline in users in 2021. That has to be seen as a canary in a coal mine for the entire social media space. However, Snap is attempting to pivot from its reliance on active monthly users and other engagement metrics. And with its foray into the metaverse it will have revenue coming in the door. That leaves earnings as the primary question and investors would be advised to watch the company’s next earnings report very carefully for guidance on that front.  

On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. 

Chris Markoch is a freelance financial copywriter who has been covering the market for over five years. He has been writing for InvestorPlace since 2019.


Article printed from InvestorPlace Media, https://investorplace.com/2022/04/why-the-drop-in-snap-stock-today-wont-last/.

©2022 InvestorPlace Media, LLC