Snap's 2023 and 2024 Ad Revenue Growth Rates Likely To Go Down Due To Tough Environment, Analyst Says While Slashing Targets By 25% - Snap (NYSE:SNAP)

Credit Suisse analyst Stephen Ju lowered the price target on Snap Inc SNAP to $22 from $29 and reiterated an Outperform rating on the shares ahead of quarterly results.
His recent checks point to improving digital ad trends for Q3 versus Q2.
Although many of the verticals where Snap has the most significant exposure underperformed the broader online ad environment during the quarter, others continue to be impacted by inflation and the supply chain.
His primary concerns for Snap are not necessarily the second half of 2022 but 2023, as exhibited by his note titled “Ongoing Tough Environment for Share Capture.”
The initial indications for aggregate online and digital budget growth are a sharp deceleration down to mid-single-digits.
Further, the current advertiser behavior to conservatively rotate budgets into larger platforms is likely to remain the norm, given macro uncertainties.
Hence he cut his 2023 and 2024 ad revenue growth rates.
He also layers in explicit Snapchat+ contributions, which surpassed 1 million members during 3Q22 and represents medium-term optionality as we do not factor in incremental user adoption for the next several years.
His re-rating reflected international monetization improvements following localization and sales ramp.
It also factored in the potential for continued audience expansion on ongoing product rollouts and global content initiatives.
The re-rating also factored in monetization optionality from Snap’s other engagement surfaces.
Price Action: SNAP shares traded lower by 1.78% at $10.23 on the last check Tuesday.

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