Market Overview

Survey Says Snap Struggling To Woo Ad Buyers, According To Cowen

Survey Says Snap Struggling To Woo Ad Buyers, According To Cowen
Related SNAP
Bulls & Bears Of The Week: CVS, EA, GM, Kinder Morgan And More
58 Biggest Movers From Yesterday

Analysts at Cowen turned bearish on Snap Inc (NYSE: SNAP) after a survey with dozens of senior U.S. advertising buyers painted a concerning picture for the social media company.

The Analyst

Cowen's John Blackledge downgraded Snap's stock from Market Perform to Underperform with a price target lowered from $12 to $11.

The Thesis

Snap, the parent company of the social media app Snapchat, managed to increase user engagement throughout 2017, Blackledge said in a note. The firm's survey of 2,500 consumers found the average time spent on the platform rose from 33 minutes per day in the first quarter of 2017 to around 38 minutes per day by the fourth quarter. While this may be encouraging, a survey with 50 senior U.S. advertisers buyers was far from positive.

Ninety-six percent of ad buyers said in the survey they would prefer to advertise on rival Instagram's Stories platform versus Snap Ads, Blackledge said. Moreover, 48 percent of ad buyers who placed an advertisement on Instagram Stories in 2017 all plan to repeat in 2018. Many of those who didn't advertise on Instagram Stories in 2017 plan to do so in 2018.

Facebook's (NASDAQ: FB) Instagram is expected to be the biggest share gainer in advertisements among any social network, Blackledge added. In fact, Snapchat's platform ranked the lowest among the advertisers surveyed relative to other social networks and received low relative marks on return on investment, targeting, data and analytics, and measurement.

The advertisers surveyed expect to increase their spend allocation on Snapchat from 6 percent in 2017 to 7 percent in 2019, which marks a decrease from last year when ad buyers expected 300 basis points of share gains in 2016 through 2018.

The survey may have played a factor in the analyst lowering his 2018 revenue estimate for Snap from $1.3 billion to $1.1 billion, while 2019's estimate was also lowered from $2.2 billion to $1.7 billion.

Price Action

Shares of Snap lost nearly 6 percent Thursday and traded around $14.52 at time of publication.

Related Links:

Facebook Steps Up Its Efforts To Crush Snapchat With New App Launch

Report: Brands Are Recognizing Instagram's Marketing Power

Latest Ratings for SNAP

Jan 2019RBC CapitalDowngradesOutperformSector Perform
Jan 2019CitigroupUpgradesSellNeutral
Jan 2019Cowen & Co.UpgradesUnderperformMarket Perform

View More Analyst Ratings for SNAP
View the Latest Analyst Ratings

Posted-In: Cowen Instagram John BlackledgeAnalyst Color Downgrades Price Target Top Stories Analyst Ratings Best of Benzinga


Related Articles (FB + SNAP)

View Comments and Join the Discussion!

Latest Ratings

CNPRBC CapitalUpgrades34.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Looking For India Exposure? Try These ETFs

International Paper Divests North America Consumer Packaging