"Snap Inc. (SNAP), the parent of Snapchat, came under pressure last week after Guggenheim analysts struck a cautious tone following their review of Q3 user growth. The stock has fallen 24% year-to-date, in stark contrast to Meta Platforms (META), which has climbed over 30%. I believe the market's skepticism is justified, as Snap still lacks clear, defensible competitive advantages to drive sustained growth and monetization."
"One of the main reasons behind my cautious stance on Snap is its lackluster user retention in North America. In Q2, despite global Daily Active Users growing by 9% YoY, North America DAUs declined by 2% YoY to 98 million. According to company filings, North America is the most significant contributor to company revenue and its most lucrative market, as evidenced by average revenue per user of $8.33 compared to the global ARPU of just $2.87."
"Snap, unfortunately, has found itself in a challenging position in North America due to structural headwinds. Snap's primary audience is the Gen Z demographic. According to data from eMarketer and Kantar, the total Gen Z population in the U.S. and Canada is approximately 80 million. Given that Snap has already captured the majority of this market, the company now needs to focus on penetrating much older user cohorts, which is proving to be difficult due to Snap'"
Snap's stock has fallen amid cautious analyst commentary and lags peers like Meta. Recent monetization trends have improved but the company remains neutral on Snap's outlook at a forward P/E of 31. North America Daily Active Users declined 2% year-over-year to 98 million despite 9% global DAU growth. North America delivers the highest ARPU ($8.33) versus global ARPU ($2.87), making retention there critical to revenue. Snap primarily serves Gen Z and has already captured most of that roughly 80 million cohort in the U.S. and Canada, leaving difficult growth prospects in older user segments.
Read at TipRanks Financial
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