Penny Stocks – Definitions & Basics
The definition of penny stocks includes stocks trading for less than $5. These types of investment vehicles are attractive to retail traders thanks to an innate ability to experience explosive gains. When it comes to finding the best penny stocks to buy, you’ve got to consider some of the reasons specific companies are trading at low prices in the first place. Some are start-ups just getting the ball rolling. Others are companies that have fallen on hard times. The second part of this scenario has recently come to light in 2022.
Thanks to the stock market crash earlier this year, selling pressures have pushed stock prices to some of the lowest in years. In some cases, prices have fallen to their lowest in the history of specific companies being public. Just look at some of the popular household names that are trading for pennies on the dollar right now: Credit Suisse (NYSE: CS), Party City (NYSE: PRTY), Blue Apron (NYSE: APRN), Bed Bath & Beyond (NASDAQ: BBBY), Virgin Galactic (NYSE: SPCE), Traeger Grills (NYSE: COOK); the list is robust in 2022.
Best Penny Stocks To Buy
Now, this isn’t the scare you away from penny stocks. It’s more to set the tone that these cheap stocks aren’t “just no-name companies” and shouldn’t be discounted as such. Think about the moves we saw during the pandemic. Novavax (NASDAQ: NVAX) ran from under $5 to over $300. There were also historic breakouts that movies are being made about from companies like GameStop (NYSE: GME) and AMC Entertainment (NYSE: AMC). Thanks to this year’s stock market crash, we’re not only seeing well-known companies drop. We’re also seeing former penny stocks revisit their roots.
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With earnings season beginning, more economic data coming out, another round of rate hikes just weeks away, and a stock market sell-off in full force, some are wondering which company will come within striking distance of $5 next. Today we look at why some traders ask, Will Snap, Inc. (NYSE: SNAP) Be On Your List Of Penny Stocks In 2022?
Will SNAP Stock Join The List Of Penny Stocks?
Social media stocks have experienced a significant level of volatility this year. Whether it’s something fundamentally in focus or speculatively based on something like Elon Musk proposing to buy Twitter (NYSE: TWTR), there’s plenty of push/pull in this niche. The “almighty earnings season,” however, has claimed its first victim. Snap Inc.’s earnings were some of the worst seen by the company since going public.
Sales growth was the slowest yet, and the abysmal outlook was too much to overcome, even with a half-billion-dollar share buyback announced. Snap said that due to the operation environment, it couldn’t provide guidance on revenue for the fourth quarter. That was the final nail in the coffin that sent SNAP stock plunging well-below Covid lows.
Snap said, “Our advertising partners across many industries are decreasing their marketing budgets…Looking forward, our focus will be on improving the subscription funnel from awareness to conversion…We believe it is highly likely that year-over-year revenue growth will decelerate as we move through Q4 as Q4 has historically been relatively more dependent on brand-oriented advertising revenue.”
Snap and other social media platforms have experienced a shake-up in recent years. Thanks to new upstarts like TikTok and others, the landscape has shifted away from standard, text- or image-only platforms. Short-form content that was briefly popular in apps like Vine has gotten a nice rebirth thanks to younger generations of users. That has hurt other short-form-style apps like Snap and its Snapchat app, which have vied for position.
SNAP Stock Forecast
Considering the backdrop of a very competitive industry and the latest earnings outlook, SNAP stock has seen a shake-up among analysts. Thanks to the lack of guidance and worse-than-expected results, are any analysts still bullish on SNAP stock right now? Here is what some firms see after the SNAP earnings release:
- Bernstein SNAP Stock Forecast: Market Perform, $9 price target
- MKM Partners SNAP Stock Forecast: Neutral, $10 price target
- Piper Sandler SNAP Stock Forecast: Neutral, $9 price target
- Barclays SNAP Stock Forecast: Overweight, $18 price target
- B of A Securities SNAP Stock Forecast: Neutral, $11 price target
- Credit Suisse SNAP Stock Forecast: Outperform, $17 price target
- Jefferies SNAP Stock Forecast: Buy, $12 price target
- JP Morgan SNAP Stock Forecast: Underweight, $8 price target
- Rosenblatt SNAP Stock Forecast: Neutral, $8 price target
- JMP Securities SNAP Stock Forecast: Market Outperform, $10 price target
- Goldman Sachs SNAP Stock Forecast: Neutral, $10 price target
- Evercore ISI SNAP Stock Forecast: In-Line, $14 price target
- Morgan Stanley SNAP Stock Forecast: Underweight, $7 price target
- Citigroup SNAP Stock Forecast: Neutral, $9 price target
- Truist Securities SNAP Stock Forecast: Hold, $10 price target
- Deutsche Bank SNAP Stock Forecast: Hold, $9 price target
- RBC SNAP Stock Forecast: Sector Perform, $8 price target
- UBS SNAP Stock Forecast: Buy, $10 price target
- Stifel SNAP Stock Forecast: Hold, $9 price target
There is no shortage of analysts weighing in on the SNAP stock forecast. But something that you’ll notice is not a single one has set a price target lower than $5. In fact, among these analyst targets and ratings, the “worst” is set to Underweight, the best is Buy, and price targets range from $7 to $18. Barclays is the most bullish in this pack.
That doesn’t help the case that SNAP stock is down over 80% year-to-date.
Is SNAP Stock A Buy Now?
While there are a few Buy ratings or equivalent, most analysts appear cautious to bearish on SNAP stock right now. The lack of earnings guidance and overall company performance has left much to be desired. That’s not to say that day traders won’t be looking for pockets of volatility in the market, especially after such a massive drop in share price.
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Will SNAP stock become a penny stock in 2022? That’s the ultimate question in the stock market today. Social media trends have experienced a shift over the last few years. Whether it’s short-form video content or augmented reality technology, companies within this niche have to consider plenty of nuances.
While the Elon-Twitter saga continues, SNAP earnings have pulled back the curtain on the fundamental side of this industry. What’s more, with some of the other industry heavyweights set to report, including Meta Platforms (NASDAQ: META), there could be even more volatility ahead. If SNAP stock is on your watch list right now, leave a comment about your outlook for the company and if you think it will become a penny stock or not in 2022.
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