SNAP – Markets expectations are for Uniform ROA to improve, but management may have concerns about growth opportunities, margins, and partnerships

November 15, 2021

  • Snap Inc. (SNAP) currently trades above corporate averages relative to Uniform earnings, with an 88.8x Uniform P/E (Fwd. V/E’).
  • At these levels, markets are pricing in expectations for Uniform ROA to expand to new highs, accompanied by 30% Uniform asset growth.
  • Meanwhile, analysts expect Uniform ROA to improve to 21% in 2022, accompanied by 34% Uniform asset growth.
  • If sustained going forward, these levels would imply a stock price closer to $31, representing approximately 40% equity downside for the firm.
  • Moreover, the firm’s most recent earnings call suggests management may have concerns about growth, Apple privacy changes, supply chain headwinds, and augmented reality.

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