Market Overview

Credit Suisse: Snap's Value Creation Strategy Is Similar To Facebook

Credit Suisse: Snap's Value Creation Strategy Is Similar To Facebook
Related SNAP
IMX Dips In October, But Investors Remain Bullish
71 Biggest Movers From Friday
Why Twitter's Robust Revenue Growth Could Slow (Seeking Alpha)

Snap Inc (NYSE: SNAP) users revolted over this quarter’s platform updates, and while the full defection rates are yet unknown, Snap can count on at least one enduring fan.

The Rating

Credit Suisse analyst Stephen Ju maintained an Outperform rating on Snap and increased the price target from $20 to $21.

The Thesis

Although he regards sequential daily active-user growth of 3 million “too conservative” of an estimate, Ju said it's too early to determine the final impact of Snap’s unpopular app update and declined to increase Credit Suisse's metric forecasts. (See the analyst's track record here.) 

“We do note that Snap has recently reversed some of these changes, which in our view de-risks a potential shortfall in users on the 1Q18 result." 

Ad checks revealed larger advertisers have marginally increased their budgets on relatively stable pricing, which Ju inferred to mean that Snap's revenue growth is being driven by smaller clients and a swell in supply.

The strategy is “a playbook similar to Facebook's value creation cycle as it ramped monetization,” the analyst said. 

Ju justified his overall bullishness with Snap’s unique accessibility to a young demographic; its capacity for margin expansion on compound annual revenue growth that exceeds cost-of-sales CAGR; and a favorable risk-reward in its share levels.

Price Action

At the time of publication, Snap was trading up 3.17 percent at $15.30. 

Related Links:

18 Internet Stocks And What To Do With Them

Tech Strategist: Twitter Is The Main Beneficiary Of Facebook's Privacy Scandal

Latest Ratings for SNAP

Oct 2018JefferiesMaintainsHoldHold
Oct 2018Canaccord GenuityMaintainsHoldHold
Oct 2018JP MorganDowngradesNeutralUnderweight

View More Analyst Ratings for SNAP
View the Latest Analyst Ratings

Posted-In: Credit Suisse social media Stephen JuAnalyst Color Price Target Reiteration Top Stories Analyst Ratings Best of Benzinga


Related Articles (FB + SNAP)

View Comments and Join the Discussion!

Latest Ratings

CPAImperial CapitalDowngrades68.0
PRMWImperial CapitalInitiates Coverage On18.0
TGTKeyBancInitiates Coverage On110.0
QCOMMorgan StanleyUpgrades0.0
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.

Renters Need Good Credit Scores, Too

Analyst: Delta Air Lines Deserves A Higher Valuation