Alphabet Surges as Snap Falters

by webmaster

Google’s parent company, Alphabet, is seeing a boost in its stock price following the release of its second-quarter earnings report. On the other hand, social media platform Snap is facing a decline in stock value due to a disappointing revenue forecast for the third quarter.

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Alphabet’s Impressive Performance

KeyBanc analyst Justin Patterson states that Alphabet has exceeded expectations with strong revenue growth in its Search and YouTube divisions. He further highlights the success of YouTube Shorts, which now reaches 2 billion monthly logged-in users, up from 1.5 billion last year. Brand advertisers are also testing ads on the platform, indicating promising potential for increased ad revenue in the future.

As a result, Patterson has raised his target price for Alphabet shares from $140 to $145. He maintains an Overweight rating on the stock and predicts continued growth based on a favorable price-to-earnings ratio for 2024.

Snap’s Challenges Ahead

In contrast, Snap is facing difficulties in the advertising market. Although the company experienced a 20% increase in active advertisers during the second quarter, larger companies appear hesitant to allocate their budgets to the platform. Patterson believes that Snap lags behind in aspects such as measurement, artificial intelligence capabilities, and overall budget, making it challenging to win back advertiser trust.

Additionally, Snap may soon face competition from Alphabet in the augmented reality (AR) space. Alphabet has introduced tools that allow users to virtually try on clothing and other items, presenting an appealing advertising opportunity. This move puts them in direct competition with Snap’s existing AR products.

Patterson maintains a Sector Weight rating on Snap stock without specifying a target price.

Stock Performance

As a result of these developments, Alphabet’s stock value has risen by 6.6% in premarket trading, reaching $130.28. Conversely, Snap’s shares have declined by 18% in the same period, currently standing at $10.24. It is worth noting that Snap’s stock has seen significant growth this year, increasing by 40% as of Tuesday’s closing.


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