New Trade for December 29th, 2023

Snapchat (SNAP) Stock: The Dark Horse in the Digital Advertising Race

While the market has been abuzz with the rise of AI stocks, a different narrative is unfolding in the digital advertising space. Since late October, ad tech companies have been outperforming the market, with Snapchat (SNAP) emerging as a standout performer.

Key Data Points:

• Market Overview: Since Halloween, digital ad stocks have surged, with SNAP leading the pack with an almost 80% increase since late October.
• Comparative Performance: While the S&P 500 grew about 14% and the AIQ by nearly 20%, digital ad stocks like SNAP have seen a more significant rise.
• Industry Dynamics: The digital ad market is expected to experience a substantial rebound in 2024, driven by a surge in consumer spending and advertising investments.
• Economic Indicators: A strong labor market, rising wages, and falling inflation are fueling consumer spending, directly impacting ad spending.
• Forecast Upgrades: Market research firm Dentsu has upgraded their forecasts for global advertising spending in 2024, expecting nearly 5% growth, almost double the rate of 2023.
• Connected TV Advertising: This segment is anticipated to grow by over 30% in 2024, benefiting platforms like SNAP.

SNAP’s Positioning:

• Valuation: Currently trading at 5.3X forward sales, SNAP’s stock is significantly undervalued, being more than 45% below its five-year average sales multiple of 9.9X.
• Market Potential: With the digital ad market poised for growth, particularly in connected TV advertising, SNAP’s current valuation presents a compelling opportunity for investors.

Conclusion:

Snapchat’s stock is not just riding the digital advertising wave; it’s leading it. The company’s positioning in a rapidly growing market, combined with its attractive valuation, makes SNAP a stock to watch as we move into 2024. For investors looking to capitalize on the burgeoning digital ad sector, Snapchat offers a unique and potentially lucrative opportunity.

[stock_market_widget type=”accordion” template=”extended” color=”#5679FF” assets=”SNAP” start_expanded=”true” api=”yf”]