After Snap, the parent company of the popular Snapchat social media app, received mostly negative reviews from Wall Street in the days following its initial public offering, analyst sentiment has now shifted in a more bullish direction. On Monday morning, JMP Securities, Citi and RBC Capital Markets all initiated coverage of SNAP stock at either “outperform” or “buy.”
According to RBC Capital analyst Ronald Josey, the Snapchat story is still in its early stages.
“With an at-scale, highly engaged and growing audience, we believe Snap’s product is differentiated and its delete-by-default approach is increasingly attracting a wider audience,” Josey says. “This as monetization ramps and despite being just six quarters in from beginning to sell ads, 60 percent of the Kantar top 200 brands are advertising on its platform.”
JMP says features such as Lenses, Geofilters and Spectacles differentiate Snap from other social media platforms. In addition, Josey sees a major opportunity for margin expansion as Snap’s advertising business matures.
One of the primary concerns bearish analysts have about Snap is the company’s declining user growth numbers in recent quarters, but Josey believes user growth will recover in time.
Citi analyst Mark May isn’t concerned about user growth and says Snap should make for an incredible growth story over the next seven years.
“While user growth and audience scale may remain modest compared with Facebook (FB), the low rate of monetization currently and the high rate of engagement and penetration of Snapchat’s product within its core 13-24 age demo should enable significant revenue growth and margin leverage,” May writes.
Citi is projecting an impressive compound annual revenue growth of 44 percent through 2024.
From March 2 to March 20, Nomura, Pivotal Research Group and Needham all initiated coverage on Snap stock with bearish outlooks. During that time, no major research firm took a positive stance on Snap.
However, the trio of bullish notes out on Monday seems to have reassured the market. Citi, JPM Securities and RBC Capital set…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
