Will Snap Stock Finally Recover in 2023?
Snap (NYSE: SNAP) shareholders went into the fourth-quarter earnings season knowing that the macro economy was weak, that the digital ad market had slowed, that Apple's user privacy changes had made tracking the effectiveness of ads more complicated, and that TikTok was a dangerous competitive threat.
Still, shareholders were disappointed on Jan. 31 when Snap reported flat year-over-year revenue results and a growing loss on the bottom line. Even worse, management is projecting a year-over-year revenue decline of 2% to 10% in the first quarter. Investors responded to the report by bidding the stock down by 8.5% the next day.
Despite all this, there are reasons to consider buying Snap stock. The company revealed several trends in that Q4 report that bode well for its long-term future. The worst of the declines in the digital ad market are over. Most of Snap's woes can be traced back to the fact that the growth in worldwide digital ad spending decelerated sharply -- from 29.5% in 2021 to 8.6% in 2022. However, according to a forecast from eMarketer, growth should begin to bounce back to 10.5% in 2023 and remain in the low double-digit percentages over the next several years.
Source Fool.com
