Market Overview

Jefferies Cautious On Snap, Says Trends Are 'Not Encouraging'

Share:
Jefferies Cautious On Snap, Says Trends Are 'Not Encouraging'

It's too early for a bearish stance on Snap Inc (NYSE: SNAP), but the social media platform's recent engagement and user trends are "not encouraging," according to Jefferies.

The Analyst

Jefferies' Brent Thill maintains a Hold rating on Snap with a price target lowered from $14 to $11.

The Thesis

The most recent third-party data analysis of Snap's user engagement in multiple countries shows daily active users and time spent on the social media platform are trending in the "wrong direction," Thill said in a Wednesday note. 

Third-party findings from SimilarWeb shows U.S. DAUs are near their lowest level since July 2017, and U.S. time spent on the platform peaked around July and has been trending lower on a month-over-month basis since then, the analyst said. 

Similar trends are being observed in key international markets including the United Kingdom, Spain, Germany, France and Australia, Thill said. If these global trends continue to worsen as users churn to rival social media platforms, it could "cause a negative flywheel" effect, as remaining loyal users have less of a reason to remain on the platform themselves, he said. 

Snap's efforts to offer a compelling Android experience remain a concern, as a full product has yet to be released, the analyst said. A proper platform on Android devices is vital for the company to fuel growth, especially in Android-dominated regions, he said. 

The general advertiser sentiment on Snap's platform is "neutral to slightly positive," and management has succeeded in shifting from large brands to smaller advertisers thanks to targeting, measurement and conversion tracking tools, Thill said. Yet if user metrics continue to trend negative, it is appropriate to ask how long advertisers will remain on the platform if user numbers aren't growing, he said. 

Price Action

Snap shares were falling 9.44 percent to $8.96 at the time of publication Wednesday. 

Related Links:

Wedbush Turns Bullish On Snap, Expresses Increased Confidence In Corporate Governance

Snap's Brain Drain Continues With Chief Strategy Officer's Exit

Latest Ratings for SNAP

DateFirmActionFromTo
Oct 2019UpgradesUnderweightEqual-Weight
Oct 2019MaintainsNeutral
Sep 2019UpgradesNeutralBuy

View More Analyst Ratings for SNAP
View the Latest Analyst Ratings

Posted-In: advertising Brent Thill DAU JefferiesAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga

 

Related Articles (SNAP)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
UDRBairdUpgrades
NKEBank of AmericaUpgrades
ARNCCowen & Co.Upgrades31.0
WDCLoop CapitalUpgrades
VARBTIGUpgrades130.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
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.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Going In Circles Over 'The Hemp Loophole'

Mid-Morning Market Update: Markets Mixed; Foamix Acne Drug Trial Meets Endpoints