Snap's stock has shown a recent increase amid claims from Edgewater Research that current analyst earnings forecasts for Q2 2025 are overly pessimistic. Despite Snap's previous earnings doubling expectations, predicted future earnings for Q2 stand at only $0.01 per share, raising concerns about its high valuation—46 times trailing free cash flow. Analysts argue that for Snap to warrant such a valuation, substantial sales and earnings growth is necessary, making it a potentially risky investment and suggesting a sell strategy for concerned investors.
Even if other analysts are wrong, and Snap's earnings don't crater in Q2, the company's really not doing well enough to justify its current valuation.
Edgewater thinks that's unreasonably pessimistic, however. The analyst argues that Snap has "momentum" heading into Q2, especially in direct-response advertising.
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