Hollow stock hooray! ②Shun Nakamura's "Recommendation How About" +α Part 5 Updated July 25

　　　　　　Snap (SNAP NYSE)

Target price: $16

<概要>

Snap is a U.S. social media company. Through the photo/video sharing app “Snapchat,” it offers information exchange and communication services via short videos and image content. It also provides content editing and publishing to partners. It also offers a service that enables video recording from a human perspective using the sunglasses developed by the company, “Spectacles.” In addition to providing numerous third-party and in-house solutions to measure advertising effectiveness, the company collaborates with partners to verify that ads were actually delivered to specific users. It measures campaign reach and frequency, and the demographics of users who viewed the campaigns. Headquarters: Venice, California.

<指標>

Market cap $13,810,166 thousand (as of 7/22); issued shares 1,386,562,899 (as of 7/22)

P/E (trailing) (consolidated) ---x (20:04) P/B (trailing) 4.26x (20:04)

EPS (trailing) (consolidated) -0.31 (as of 2021/12) BPS (trailing) 2.34 (as of 2021/12)

<ニュース>

Snap, the U.S. company behind the photo/video sharing app Snapchat, reported fiscal Q2 results for April–June, with revenue below analysts’ expectations. On July 21, revenue for April–June rose 13% to $1.11 billion (about 150 billion yen). Analysts’ consensus was $1.14 billion. Snap had asked investors in May not to rely on its initial growth outlook, but the outlook was not met. Advertisers are cutting budgets more than expected. Snap attributed this trend to broad economic uncertainty. In April–June, Snapchat's daily active users (DAU) were 347 million. User growth outpaced rivals Facebook and Twitter, but this was not rewarded by the market. In a letter dated July 21, the company stated, “Macroeconomic headwinds, platform policy changes, and intensifying competition limited campaign budget growth.” Due to economic uncertainty, the company did not provide guidance for Q3 (July–September). Net loss for April–June was $420 million, larger than the market expectation of $33.27 million. Management plans to slow hiring significantly. Snap’s board approved a buyback program of up to $500 million over the next year to offset employee equity compensation.

Following this earnings report, analysts issued downgrades on Snap stock.

1)JPMorgan lowered its rating from “Overweight” to “Underweight,” and reduced the target price from $24 to $9.

- “The strong engagement and rapid monetization growth of TikTok are having a significant impact on Snap’s business.”

- Snap faces pressure stronger than the pressures on larger platforms Google (Alphabet) and Meta Platforms.

2)Atlantic Equities also lowered its rating from “Overweight” to “Neutral,” and reduced the target price from $18 to $13.

- Snap will lose its valuation premiums within its sector.

- TikTok is unlikely to affect Snap’s core messaging service, but it is eroding Snap’s monetizable time.

<ギャン理論による株価分析・目標＞

（●=15.5-month cycle (15±3), ▲=22.3-week cycle, △=11-week cycle）

Bullet markets show that the U.S. stock cycles of 15.5 months and 22.3 weeks are effective. Like other IT stocks, the bottom is considered to be December 2018, with the first 15.5-month cycle bottoming in March 2020, and the second 15.5-month cycle bottoming at $49.90 on May 13, 2021. The 15.5-month cycle consists of three 22.3-week cycles or two 31-week cycles, but a complex combination pattern was only observed in the third 15.5-month cycle in the past.

Currently, we are in the third 15.5-month cycle of the long-term cycle that began in December 2018, with September 2022 ± 3 months as the target. Cyclically, the third 22.3-week cycle of the 15.5-month cycle is already at week 24. The stock has been sold down to levels where a bottom could occur at any time.

There is strong resistance and support around the number 8, with the March 2020 low at 7.89, essentially $8. Levels 8-16-24 and the intermediate 12 and 20 are also critical. Since it has broken important levels at 16 and 12, the retracement to 8 may be the key point.

Although it is a loss-making, startup-type stock that does poorly in rising interest rate environments, a certain degree of autonomous rebound is plausible from a cycle perspective.

Wait for declines to around $8 and confirm a significant rebound;

Targets: ① 12 ② 16 ③ 20.

【プロフィール】

Shun Nakahara Weekly Report is written every Monday.

Grandfather made a fortune in Sony, mother in Pioneer—he hails from a family of speculators.

With more than 20 years in the market, he is a well-known authentic trader familiar with the strategies of Larry Williams and Tom DeMark; his techniques are widely recognized. The “Gann theory” includes many elements that are not publicly shared, and in the U.S. some parts can only be obtained by taking expensive “Gann seminars.” Nakahara is one of the few Japanese specialists in Gann theory who have studied these seminars. He is also famous for seldom appearing in public.