Meta shares still offers more value than Snapchat after its decline

SNAP share price

Last week saw a dramatic fall in the share price of Snapchat holding company, SNAP Inc.

While the US technology sector has been under pressure, the near-term SNAP price fall found its impetus from a revised trading update released by the business.

While the group had previously forecast revenue growth for the upcoming quarter of 20% to 25% annualised, and Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) up to $50million, the group now expects results to miss these forecasts on the back of a ‘deteriorating’ economy.

With the SNAP share price having declined excessively this year, we take a quick look at how the company stacks up against peers Meta (Facebook), Twitter Inc. and Pinterest.

Performance

In terms of a one month, three month and year-to-date total return, SNAP has been the worst performing share amongst its peers listed here. Twitter, while still negative year-to-date (-7.06%) is the outperformer.

We have, however, seen a sharp post-earnings gain in the Meta share price, making it the strongest performer in terms of total returns over the last month.

Fundamentals

While SNAP has been the worst performer year-to-date, it still carries the most expensive valuation in terms of a forward price to earnings multiple (45.74). The company also has the highest level of debt as a percentage of equity (relative to its peers) and the weakest operating margins.

Meta is the most conservatively priced on a price-to-earnings (P/E) valuation, with the best operating margins amongst the peers listed and very low levels of debt relative to equity.

Broker ratings and price targets

The recent share price decline does, however, see SNAP trading at the broadest discount to a consensus of 42 brokers' long-term price targets on the company.

Meta currently trades at the second largest discount to its long-term consensus of price targets from 58 brokers / analysts. SNAP and Meta both currently carry consensus 'buy' ratings while Twitter and Pinterest carry consensus ratings of 'hold'.

SNAP Inc. – technical analysis

The share price of SNAP remains in a long-term downtrend. There is, however, a short-term suggestion that the share is oversold at current levels. Should a rebound from oversold territory manifest, it would be considered a short-term correction of a longer term downtrend.

Traders respecting the longer term downtrend might look for short entry in the event of a rebound from oversold territory. Only on a move back above dotted trendline resistance on our chart would we reassess the merits of a long bias to trades on the stock once again.