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Why Snapchat Could Have A Big Quarter

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Why Snapchat Could Have A Big Quarter

Snapchat owner Snap Inc (NYSE: SNAP) shares have risen over 350% in the last year. Analysts think there could be more opportunities for the company with its growth in social commerce and younger demographic.

The Snap Analysts: Wedbush analyst Ygal Arounian upgraded shares of Snap Inc. from Neutral to Outperform and raised the price target from $52 to $75.

Bank of America analyst Justin Post maintains a Neutral rating and price target of $67 for Snap.

Advertising Strength: “We see Snap uniquely positioned as a video-centric platform, with an augmented reality and social commerce opportunity, also centered around a younger, digitally native audience,” Arounian said.

Snap has improving momentum coming out of the pandemic with its younger audience being attractive to advertisers, the analyst notes.

Snap more than doubled its advertiser count year-over-year in the fourth quarter of fiscal 2020 and reached its highest number of advertisers to date.

“The strength in advertisers is an inflection point for Snap in our view as its product investments are bearing fruit.”

Snap is focused on video content for advertisers and has been pushing with augmented reality. The growth of digital advertising could be a positive for Snap.

Advertisers look for highly engaged audiences and Snap has 265 million daily active users who open the app an average of 30 times a day.

Related Link: Why Snap Analyst Is Confident Of Multiple Years Of Elevated Growth

E-commerce Opportunity: E-commerce offerings from Snap could be another positive catalyst for the company.

“Snap has made material improvements in its e-commerce offerings, but is still in the very early stages of what we view as a long-term opportunity in social commerce,” Arounian said.

A full product offering for e-commerce could include advanced advertising, self-serve tools, video ads and maps, the analyst said.

First Quarter: Advertising strength could help power the first quarter for the company, Post said. Spotlight, the company’s competitor to TikTok, is gaining traction and could help with downloads of the app.

SensorTower shows downloads up 38% year-over-year in the first quarter. Daily time on the app per user is up 19% quarter-over-quarter for iOS and up 24% quarter-over-quarter for Android. Post said the data suggest a strong first quarter.

“With a positive 2Q outlook also expected, we see the biggest opportunity for call is increased optimism on usage shift to Snap for bigger platforms,” Post said.

SNAP Price Action: Snap shares are up 0.72% to $62.89 on Wednesday afternoon.

(Image: Snap)
 

Latest Ratings for SNAP

DateFirmActionFromTo
Apr 2021Morgan StanleyMaintainsOverweight
Apr 2021KeybancMaintainsOverweight
Apr 2021Cowen & Co.MaintainsOutperform

View More Analyst Ratings for SNAP
View the Latest Analyst Ratings

 

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