Daily Traders Edge

Snap is going to soar 40% to its $17 IPO price, analyst says

April 09
09:57 2019

Snap’s stock price is going to soar back to its initial-public-offering price of $17 a share, according to one Wall Street analyst.

In a note sent out to clients on Monday, the RBC research analyst Mark Mahaney said shares of the camera company had a more than 40% upside. He upgraded Snap to “outperform” and raised his price target to $17, a level where shares most recently traded in March of last year.

The company went public in March 2017 at $17 a share. After an initial spike they dropped steadily through the end of 2018 before rebounding over 100% this year. Shares were up nearly 5% early Monday, trading near $12.40 apiece.

Mahaney’s research note listed five reasons for his upgrade:

1. ‘Evidence of Stabilization in Apple iOS and Traction in Android Users’:

Data from third-party providers indicates that Snap’s Apple app rankings have finally stabilized and that its Google Play downloads have picked up.

Snap has also faced a series of “technical” glitches in its Android product that have limited adoption outside the US (as Android’s user base is more prevalent outside the US). These glitches have now largely been fixed, potentially setting the app up for growth in these regions.

Daily average user growth has been stable at 186 million to 187 million over the past year; however, continued progress on developing both the Apple and Android platforms should return the company to a steady growth trajectory.

2. ‘Long-Standing Monetization Upside Potential May Now Be Unlocked’:

Snap’s average revenue per user has long trailed that of Twitter and Facebook. Snap generates just one-third of Twitter’s revenue per use and one-fifth of Facebook’s.

According to Mahaney, Snap has a variety of levers at its disposal to close the gap, including improved measurements of advertisers’ return on investment and traction of its non-skippable ads for the growing premium content business.

Continue Reading at Markets Insider

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