SNAP Lost 17% In A Week. Do You Buy Or Wait?
Snap (SNAP) stock is down 17.5% in 5 trading days. History of recovery post-dips is not on your side and there is fundamental risk – specific to profitability and downturn resilience. Consider the following data:
- A $13 Bil company with $5.5 Bil in revenue currently trading at $7.78.
- Last 12 month revenue growth of 14.9% and operating margin of -11.7%.
- Has Debt to Equity ratio of 0.3 and Cash to Assets ratio of 0.4
- Currently trading at P/E multiple of -24.8 and P/EBIT multiple of -28.4
- Has returned (median) -6.1% within a year following sharp dips since 2010. See SNAP Dip Buy Analysis.
While we like to buy dips if the fundamentals check out – for SNAP, see Buy or Sell SNAP Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and SNAP drops another 20-30% to $5.45 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience.
Below is a deep dive into Snap (SNAP) downturn resilience – specifically, its performance vs the market during past crises? Turns out, the stock has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
Before that, as a quick background: SNAP operates a camera app with features like communication, Snap Map, Stories, and Spotlight, plus Spectacles eyewear that captures photos and videos from a first-person perspective.
2022 Inflation Shock
- SNAP stock fell 90.7% from a high of $83.11 on 24 September 2021 to $7.76 on 21 October 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- The stock is yet to recover to its pre-Crisis high
- The highest the stock has reached since then is $17.45 on 6 February 2024 , and currently trades at $7.78
| SNAP | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -90.7% | -25.4% |
| Time to Full Recovery | Not Fully Recovered days | 464 days |
2020 Covid Pandemic
- SNAP stock fell 56.5% from a high of $19.25 on 23 January 2020 to $8.37 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 1 June 2020
| SNAP | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -56.5% | -33.9% |
| Time to Full Recovery | 75 days | 148 days |
2018 Correction
- SNAP stock fell 81.6% from a high of $27.09 on 3 March 2017 to $4.99 on 21 December 2018 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 5 October 2020
| SNAP | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -81.6% | -19.8% |
| Time to Full Recovery | 654 days | 120 days |
Worried that SNAP could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.