Snap Inc SNAP 1.35% remains a story stock for now, but Credit Suisse believes that story will have a happy ending. Credit Suisse analyst Stephen Ju has initiated coverage on Snap with an Outperform rating and says the stock is a risk worth taking for investors.
Ju highlights three reasons the firm loves Snap stock:
- The firm estimates upside of roughly 32 percent compared to downside of only around 21 percent.
- The company’s younger customer base is an extremely valuable demographic for advertisers.
- Snap should be able to expand margins in the long term.
Despite the potential bullish drivers, Ju issues a word of caution to Snap investors.
Cautionary Tale
“We also point out that investing in SNAP shares, in our view, is high-risk/high-reward given the presence of a long list of well-heeled global competitors, and the potential for the migration and/or the failure to hang on to its existing user base or scale advertising revenue through ongoing product development,” Ju explained.
However, he noted that investors should be able to keep a close watch on Snap’s monetization process via the company’s quarterly earnings reports. In the meantime, Ju expects…
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