Snap is now taking the "necessary steps in the background" to improve its ad budget allocations, Ju commented in a research report (see his track record here). Specifically, the company is improving its advertising API technology, rolled out new self-serve tools for advertisers and launched Snap Publisher.
The analyst's first-hand checks also suggest a "modest increase" in CPM after "hitting a trough" in the second quarter. At the same time, Snap's North American sequential daily active user net add likely improved to 3.2 million, which marks an increase from a prior estimate of 1.5 million.
Investors have three reasons to hold a bullish stance for the social media company over the longer-term, including:
- The stock has a downside risk of just 6 percent versus an upside potential of 39 percent.
- Snap is at its core a "scarce asset" that best targets the younger demographic group.
- Snap remains a "margin expansion story" as its compounded annual revenue growth rate exceeds its cost of sales compounded annual growth rate.
At time of publication, shares of Snap were up 3.21 percent at $14.80.
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