The next catalyst for shares of Snap is unclear, and that’s enough of a reason to take a pause on the social media stock, according to Jefferies. Analyst James Heaney downgraded the technology stock to hold from buy, saying in a note to clients Thursday that a difficult macro picture should pressure Snap’s revenue growth over the next year. Wall Street anticipates 9% growth in 2023. By comparison, Jefferies’ revenue estimates assume just 2% growth. “We believe that SNAP will continue to face several headwinds, including the iOS14.5 privacy changes, a worsening macro picture, and intense competition,” he said. “While many of these factors are well understood, [consensus revenue estimates] still appear too optimistic, particularly given the lack of company specific catalysts.” Snap’s valuation has come down drastically this year, with shares tumbling nearly 80% as it faces slowing growth and a weakening advertising market. That drop could protect Snap shares to the downside if not for its “lack of profitability and clear product catalysts,” Heaney said. He trimmed the bank’s price target on shares to $10, suggesting a modest potential 5% bounce from Wednesday’s close. “We believe SNAP’s multiple should remain discounted relative to peers given our muted expectations for revenue growth over the next few years,” Heaney wrote. The stock shed more than 2% in the premarket. — CNBC’s Michael Bloom contributed reporting
© heardonwallstreet.com