Snap's Q4 Points To 'Material Multiyear Growth' Ahead, BofA Says In Upgrade


27% profit every 20 days?

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Snap Inc (NYSE:SNAP) reported after Tuesday's market close its first-ever better-than-expected quarterly earnings report since becoming a public company nearly one year ago, which turned at least one Wall Street analyst bullish on the social media company's outlook.

The Analyst

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Bank of America Merrill Lynch's Justin Post upgraded Snap's stock rating from Neutral to Buy with a price target boosted from $16 to $24.

The Thesis

Snap's fourth-quarter report consisted not only consisted of a top- and bottom-line beat, but total users of 187 million exceeded the Street's expectation of 184 million and monetization ramped "much better" than expected, Post said in the upgrade note. Snap's programmatic platform and stronger advertiser adoption helped the company "turn the corner" on monetization, and the company now faces "material multiyear growth," Post said, projecting five-fold growth from the current revenue per daily active users figure of $2.75.

Snap's earnings report included encouraging progress on the Creative Tool transition to programmatic, as scaling advertising around Snap usage — as opposed to Stories — was previously a big investor concern, the analyst said. 


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Snap has multiple "potential engagement drivers" ahead, Post said:

  • The Winter Olympics.
  • The rollout of the app redesign.
  • A rebuild of the Android app.
  • Traction for newer features like Stories Everywhere.

Investors could view the encouraging earnings report as being "somewhat of an inflection," and could expect multiple positive upcoming events in the first quarter, according to BofA. 

Price Action

Shares of Snap were trading higher by more than 20 percent ahead of Wednesday's market open.

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27% profit every 20 days?

This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.


Posted In: Analyst ColorAnalyst RatingsBank of AmericaDAUJustin PostSnapChatSnapchat MonetizationSnapchat Storiessocial media