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Analysts See Facebook, Google Able To Withstand Ad Dollar Competition From Snapchat; Twitter Not So Much

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Analysts See Facebook, Google Able To Withstand Ad Dollar Competition From Snapchat; Twitter Not So Much
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The rise of Snapchat could be bad news for social media stocks, but some should be more scared than others. According to CLSA analyst James Lee, Twitter Inc (NYSE: TWTR) could be the biggest victim of Snapchat’s success.

CLSA recently conducted an investor conference call with an advertising expert from a leading ad agency. Not only is Snapchat expanding its ad offerings by offering more ads in User Stories, its ads are also priced at a premium to peers.

“The engagement rate, measured by the CTR (click-through rate) of swipe-ups, is above peers at 7.5 percent, which enables the messaging platform to charge a premium compared to peers and is encouraging for the early start,” Lee explained.

Related Link: Twitter's NFL Streaming Debut Draws Positive Social Media Reviews

Snapchat video ads are priced at $20 CPM (cost per thousand), much higher than Facebook Inc (NASDAQ: FB)’s $6 and Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL)’s $8 for YouTube.

Although the shift in video advertising from TV to online is still in the early stages, Lee believes it will continue to be a secular driver for internet stocks.

Because of Snapchat’s focus on tent-pole advertising (advertising focused on events or product launches), the ad expert believes it is competing most directly with Twitter, which is also tent-pole focused.

CLSA maintains Buy ratings on Facebook, Alphabet and LinkedIn Corp (NYSE: LNKD) and an Underperform rating on Twitter.

Full ratings data available on Benzinga Pro.

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Latest Ratings for TWTR

DateFirmActionFromTo
Aug 2017SunTrust Robinson HumphreyInitiates Coverage OnHold
Jul 2017Bank of AmericaMaintainsUnderperform
Jul 2017Standpoint ResearchDowngradesReduceHold

View More Analyst Ratings for TWTR
View the Latest Analyst Ratings

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