What Happened?
Shares of social network Snapchat (NYSE: SNAP) jumped 5.5% in the afternoon session as the broader market rallied after the Senate advanced a deal to end the government shutdown. The news spurred a widespread market rally as investors reacted positively to the potential end of a shutdown that had created economic uncertainty. Tech stocks were among the top performers during the session, leading the rebound. The tech-heavy Nasdaq Composite climbed 1.6%, while the S&P 500 also gained, reflecting broad positive sentiment across Wall Street.
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What Is The Market Telling Us
Snap’s shares are very volatile and have had 27 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 4 days ago when the stock gained 15.9% on the news that the company announced a $400 million partnership with AI startup Perplexity, revealed a new $500 million stock buyback program, and posted strong third-quarter financial results. The deal with Perplexity involved integrating the startup's conversational AI answer engine into Snapchat's chat feature, creating a new revenue stream for Snap. Adding to the positive news, the company authorized a plan to repurchase up to $500 million of its stock, often a sign of management's confidence in the business. These announcements followed a solid third-quarter report where revenue grew 10% year-over-year to $1.51 billion, beating expectations. Daily active users also increased by 8% to 477 million. The combination of a major AI partnership, a significant stock buyback, and better-than-expected financial performance prompted positive reactions, with multiple analysts raising their price targets for the stock.
Snap is down 23.1% since the beginning of the year, and at $8.64 per share, it is trading 32.8% below its 52-week high of $12.86 from December 2024. Investors who bought $1,000 worth of Snap’s shares 5 years ago would now be looking at an investment worth $224.27.
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