Posted on June 10th, 2019
Snap Inc. (SNAP) may be the comeback story of 2019, with the stock up more than 150% thus far. Hedge funds were buying Snap aggressively in the first quarter as the shares were rising off their December lows. Even since the end of the first quarter, the stock has continued to rise, and it may very well be the case that the hedge funds are still buying the equity.
The public debut of Snap is one that many investors would like to forget. The stock came public in March 2017 and saw its stock price decline by almost 80% through the end of 2018. It could be one of the more disastrous IPO’s in recent memory. The stock resurgence has landed it in the WhaleWisdom WhaleIndex 100 as of May 15, and it has risen by over 20% since the addition.
During the first quarter, the aggregate number of 13F shares held among hedge funds more than doubled, rising to 93.5 million from 44.9 million. Additionally, the number of total shares among institutions increased by over 13% to 350.7 million from 309.6 million. In total, 24 hedge funds created new positions in the stock, while 13 added to existing holdings. Meanwhile, 8 hedge funds reduced their stakes, while 8 exited the stock.
One reason for the stock’s resurgence has been a return to growth for its daily active users. During the first quarter, daily active users increased by 4 million sequentially to 190 million. Additionally, the company reported better than expected revenue and a smaller loss, as well as providing better than expected second quarter guidance.
For the second quarter, analysts now estimate that revenue will increase 36% year-over-year to $357 million. Meanwhile, analysts are forecasting a loss of $0.10 per share, which is better than the loss of $0.14 in the same quarter a year ago.
The strong revenue growth is expected to continue for the full year of 2019, with revenue climbing by 35% to $1.59 billion. Meanwhile, the company is forecast to see a loss of $0.30 per share, an improvement from a loss of $0.47 per quarter a year ago.
Since the completion of the first quarter, the stock has continued to rise, increasing by 26%. It would suggest that investors are still very interested in the stock and that hedge funds are even actively buying shares.
If Snap can keep the business turn around going, perhaps the stock can one day even get back to its IPO price.