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Here's Why Snap Stock Popped Today

By Chris Neiger – Oct 23, 2020 at 1:02PM

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An analyst's increased price target following a strong Q3 boosted investor sentiment.

What happened

Shares of Snap (SNAP -5.32%) were rising today after an analyst raised his price target for the company's stock. Its shares were up by as much as 10.5% earlier but settled to 8.1% as of 12:28 p.m. EDT.  

So what 

Citigroup analyst Jason Bazinet raised his price target for Snap today to $24, up from the previous $19, though he kept a sell rating for the stock. The price target increase comes after Snap's third-quarter results beat analysts' revenue and earnings estimates earlier this week.

A blue arrow rising on top of  a bar chart

Image source: Getty Images.

Snap's revenue of $679 million in the quarter easily outpaced Wall Street's expectation of $556 million, and the company's adjusted diluted earnings of $0.01 per share beat analysts' consensus estimate loss of $0.05 per share. 

Daily active users also increased for the company's Snapchat app by 18% year over year to 249 million, and the company's net loss narrowed to $200 million, an improvement from a loss of $227 million in the year-ago quarter.  

Investors have been pushing Snap's stock up since the company released third-quarter results on Tuesday, and today's price target increase helped keep the momentum going. 

Now what 

Snap's stock is up 158% year to date, but investors should keep in mind that the market is anything but predictable right now. The U.S. is still in a recession and dealing with the effects of the COVID-19 pandemic. These factors could bring increased volatility to the stock market in the coming months and could eventually lead to a pullback for some stocks that have experienced significant gains over the past several months.

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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