"Snap opened roughly 5% higher today as the company highlighted its health-focused advertising strategy, as users between the ages of 18 and 45 continue to turn to social media for health tips and information. However, the stock slid throughout the day and closed 1.5% down."
"While this added advertising potential could help reinvigorate Snap's stock, it has too many fires to put out to be a 'buy' for me. The company is facing child-safety litigation, an EU probe into its child-safety practices, the potential for age bans in an increasing number of countries, and continued activist investor pressure."
"Despite never reaching profitability, management has been handsomely rewarded over time. Stock-based compensation still equals 17% of sales, and Snap's shares outstanding have risen by 4% annually over the last decade."
Snap closed at $4.73, down 1.46%, following earlier gains from a health-focused advertising strategy. Investors are uncertain if healthcare budgets will drive growth. Trading volume was 59.3 million shares, above the three-month average. Snap's stock has fallen 81% since its 2017 IPO. The S&P 500 and Nasdaq Composite saw gains of 2.52% and 2.80%, respectively. Despite potential advertising growth, Snap faces litigation, regulatory scrutiny, and management compensation issues, making it a risky investment.
Read at The Motley Fool
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