Snap has 3 things going in its favor that 'investors have yet to appreciate,' according to Barclays (SNAP)

pulse

April 12, 2018 9:47 PM

Snap stock has slid recently, but Barclays says investors should hold on.

Snap stock skyrocketed to above $20 in February, only to then get hit with a slew of headwinds, landing it at a negative return for the year.
Sandler lists three core reasons Snap is set to show a good first-quarter report card.

Snap should see a positive first-quarter earnings report, according to a note from Barclays analyst Ross Sandler.

Snap shares are down slightly less than 1% year-to-date, after they soared to above $20 on a positive fourth-quarter 2017 earnings report.

The stock got hit on a number of fronts, sending it back down below its $17 a share IPO price. Snap faced an onslaught of negative attention starting with Kylie Jenner fleeing the platform in late February, which wiped out $1.3 billion of market cap. In mid March, Snap had to apologize and pull an advertisement asking users "w

The Snap-specific stock drops have largely centered around investors' fear of decelerating user growth, which Sandler says is "overdone."

Sandler, who has a bullish price target of $21 on Snap, cited three reasons investors should expect a good start to 2018 for Snapchat.

new advertising technology
The key positive development that most investors have yet to appreciate is the traction SNAP is seeing with direct response marketers after rolling out its measurement pixel in late 4Q," Sandler wrote. He added that "We've spoken to a number of advertisers who have ramped spend on SNAP meaningfully in the last 90 days after adopting the pixel."
Snap's daily active user growth should be strong. "Concerns around SNAP seeing a huge deceleration in DAU net adds and engagement on the back of the recent redesign are overblown," the note said. It said "SNAP has far higher daily engagement (25+ sessions/DAU) and is a core communication service." It added that "a couple tweets from celebrities and a petition from 1.5m users is unlikely to meaningfully impact the aggregate 190m DAU base."
Sandler also believes that marketers want to diversify their ad platforms, which

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