Snap Is Steadily Getting People To Invest Again
Shares of Snapchat maker, Snap Inc. (NYSE:SNAP) have more than doubled since the start of the year which may come as a surprise if you haven't been paying attention. For much of 2018, it seemed the company, a once highly-touted darling tech IPO, was in a tailspin with no recovery in sight.
The app was running sluggishly on Android, and user engagement began to fall off once Instagram (NASDAQ:FB) launched its competing 'Stories' feature.
New tailwinds seem to usher in positive sentiment for Snap
— Snapchat (@Snapchat) April 8, 2019
Snap has recently added some quality members to its executive management team poached from industry stalwarts such as Google (NASDAQ:GOOGL), Spotify (NYSE:SPOT), and Amazon Inc. (NASDAQ:AMZN). Proven management talent is a proven way to buoy investor confidence aside from the real-world benefit from adding seasoned professionals to a company's headcount.
Now some analysts are weighing in on Snap's future prospects.
Richard Greenfield is an analyst at BTIG and has been among the most bearish on the company. His firm formally upgraded their rating from 'sell' to a 'buy' rating with a price target of $15, a 15 percent upside. They cited a more mature company that feels generally like less of an upstart from a year ago, and the recently added features like Snap Games. Greenfield goes on to say, “A couple [of] years ago they were trying to be for everyone; now they’re just focused on nailing their core demographic.”
So Snap is drilling down to its core 18 to 30-year-old audience and is focusing its efforts here.
BTIG was joined by RBC in upgrading their outlook on Snap Inc. Mark Mahaney at RBC said shares of the company had reached a turning point and presented a price target of $17.
Some analysts actually traveled to Snap's headquarters to interview leaders within the company, and they came away generally impressed. While not quite as bullish as the preceding two, Jeffries analysts upgraded their PT from $9 to $11, equivalent to a wait-and-see approach.
Tech valuations have been all over the place over the last 6 months. Tech suffered through a massive sell-off last October, and now we are returning to the same lofty valuations as before. Companies have been enjoying a resurgence since the start of the year, however.
Lyft (NYNASDAQ:LYFT) is in many ways similar to Snap in that they're attempting to grow revenue while improving margins with some serious industry competition. Lyft completed its IPO last week and despite initial hype is trading about 4 percent lower than its opening price.
Shares of Snap closed today up about half a percent at $12.35. The company is expected to deliver 33 percent revenue growth q-o-q later this month when it delivers its first-quarter financial results.