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

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.

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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.

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