- Along with its bullish initiations on Facebook and Alphabet today in new coverage of U.S. large-cap Internet stocks, Goldman Sachs also diverged on a pair of other social-media names: Snap and Twitter.
- The firm started Snap (SNAP -4.5%) with a Buy rating, calling it one of the fastest growers in the coverage universe. As with its other new ratings, it says the Snap case if framed around three debates.
- It's increasingly likely that Snap can hit its target of 50%-plus revenue growth in the coming three years, with upward pressure coming from global user growth, platform revolution and product evolution, the firm says.
- It also believes the company can scale its margin structure, expecting EBITDA margins to go from -13% in 2021 to 40% in 2026. And it says platform/product innovation will keep driving industry-leading growth.
- Snap should generate a 2021-2026 revenue compound annual growth rate of about 41% (thanks to a mix of user growth, ad price inflation, and product innovation in core advertising).
- Goldman has a $90 price target, now implying 27% upside.
- Conversely, the firm is starting coverage of Twitter (TWTR -3.3%) at Sell - saying it sees the company less as a social media platform and more as a differentiated media/publishing platform.
- The "town square" aspect of Twitter is what offers a unique proposition for users, Goldman says, so the main debate is whether Twitter can "morph its core use case to appeal to a wider, more scaled audience base; and/or (b) execute...
Read Full Story: https://seekingalpha.com/news/3739235-goldman-sachs-bullish-on-snap-bearish-on-twitter-in-social-media-initiation
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