Snap Inc. (SNAP) Stock Jumps 7% on Analyst Earnings Beat Expectations

TLDR

Table of Contents

Snap stock surged 7.13% on June 27, closing at $8.72 after opening at $8.30
Edgewater Research suggests analysts are setting a low bar for Q2 earnings, creating potential for another earnings beat
Company doubled consensus forecasts in Q1 with $0.08 profit per share, but Q2 forecasts predict only $0.01 per share
Direct response advertising momentum is improving according to Edgewater, though they maintain neutral rating
Stock hit intraday high of $8.95 but remains well below 52-week high of $17.33

Snap stock jumped 7.13% on June 27, closing at $8.72 as analysts suggested the social media company might beat earnings expectations again. The rally came after Edgewater Research argued that Wall Street is setting the bar too low for the company’s second quarter results.

The stock opened at $8.30 and quickly climbed to an intraday high of $8.95. Strong buying pressure marked the entire trading session. Despite some afternoon consolidation, the stock held most of its gains through the close.

Trading volume reached 442,772 shares, well below the average daily volume of 38.2 million shares. After-hours trading showed minimal movement with the stock dipping slightly to $8.71.

Edgewater Research sparked the rally with commentary suggesting other analysts are being too pessimistic about Q2 earnings. The firm pointed to improving momentum in direct response advertising as a key factor that competitors are missing.

Current consensus forecasts predict Snap will earn just $0.01 per share in Q2 on revenue of $1.3 billion. That represents high single-digit sales growth but a sharp slowdown from Q1 performance.

Earnings Beat History Sets Stage

The company delivered a surprise in Q1 by doubling consensus forecasts with $0.08 profit per share. This earnings beat came despite broader concerns about advertising spending in the current economic environment.

Edgewater maintains a neutral rating on the stock but is becoming more optimistic about near-term prospects. The firm specifically highlighted improvements in direct response advertising that other analysts may be overlooking.

The stock’s current price of $8.72 represents a move up from its 52-week low of $7.08. However, it remains far below the 52-week high of $17.33 reached earlier in the year.

Valuation Concerns Persist

Despite the positive momentum, valuation questions remain. The company trades at more than 46 times trailing free cash flow, a multiple that some analysts view as expensive given current growth rates.

Sales growth was only 8% in the most recent quarter. Earnings under generally accepted accounting principles remain negative despite the recent profitable quarter.

The market cap stands at $15 billion with gross margins of 51.4%. The company does not pay a dividend to shareholders.

Technical analysts note that $8.95 now serves as a key resistance level following Tuesday’s high. The closing price of $8.72 provides the first support level for any potential pullback.

$SNAP is breaking out the multi month resistance level. intrinsic value of the stock is over 30$ which implies 4 x from now. pic.twitter.com/Q6dBuffNqg
— Baltachi Research /🍁/ (@Baltachi_com) June 27, 2025

Strong momentum from a 7% single-day gain could attract additional buyers if the stock can maintain current levels. Some traders view any small dips as potential buying opportunities.

Conversely, profit-taking pressure could emerge after such a sharp move higher. Early investors may look to lock in gains at current price levels.

The company reports Q2 earnings on July 31, which will test whether Edgewater’s optimistic view proves correct. Direct response advertising trends will be closely watched in that report.

Current trading puts the stock at the upper end of its recent range but still well below previous highs. The stock’s 52-week range spans from $7.08 to $17.33, showing the volatile nature of the shares.

Snap closed Tuesday’s session with strong momentum as buyers stepped in throughout the day to push shares higher on analyst commentary about potential earnings upside.

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