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Snap Inc. (SNAP) Down Again Despite Gaining "Older" Users
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Shares of Snap Inc. (SNAP - Free Report) dipped again Monday despite an investment research group’s note to clients that pointed to some potentially positive signs for the fledgling app maker, including usage growth among the “older” demographic.
Jefferies equity analyst Brian Fitzgerald sent a note on Monday to clients that stated Snapchat’s usage rate had grown with users over the age of 25. The note detailed an updated version of a 2016 Jefferies’ survey of 1,000 Facebook Inc. and Snapchat users between 18 and 45.
"In our proprietary survey we were surprised to see that Snapchat's engagement is growing in older demographics," Fitzgerald noted. "We found that usage has increased across the platform, but the most improvement has been seen in users aged 25+."
Still, Snap’s stock price was down 1.31% to $19.92 per share through morning trading on Monday. Snap is currently a Zacks Rank #3 (Hold).
The positive news for the disappearing photo and video app company comes just days after an announcement that Facebook-owned Instagram’s Stories feature surpassed 200 million daily active users, which placed it well ahead of Snapchat’s reported 161 million users.
Despite the note pointing to Snapchat user engagement growth, it has not come at the expense of Instagram’s continued growth. According to the survey, 25% of the people said they spend "much more time on Instagram" vs. 20% who said the same about Snapchat.
Jefferies continues to give Snap a “buy” rating and maintains a $30 per share price target for the stock.
Other Potential Positives
The Jefferies’ note also pointed to Snapchat being able to bolster advertising revenue through the use of more highly targeted and engaging ads.
“We believe that Snap’s biggest driver over the coming 12-18 months will be its ability to leverage its massively engaged user base with greater advertising tools and driving its ARPU (average revenue per user) closer to peers,” the note said.
According to the note, Snapchat advertisements are most effective when there is a strong or immediate call to action. A Gatorade ad that ran during the US Open tennis tournament featuring an 8-bit tennis video game reported a click-through rate of 16%, which is almost 10 times more than the average Snapchat ad.
Since Snapchat makes most of its money through advertising, anything the company can do to improve the viability of its platform for advertisers is a good thing.
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Snap Inc. (SNAP) Down Again Despite Gaining "Older" Users
Shares of Snap Inc. (SNAP - Free Report) dipped again Monday despite an investment research group’s note to clients that pointed to some potentially positive signs for the fledgling app maker, including usage growth among the “older” demographic.
Jefferies equity analyst Brian Fitzgerald sent a note on Monday to clients that stated Snapchat’s usage rate had grown with users over the age of 25. The note detailed an updated version of a 2016 Jefferies’ survey of 1,000 Facebook Inc. and Snapchat users between 18 and 45.
"In our proprietary survey we were surprised to see that Snapchat's engagement is growing in older demographics," Fitzgerald noted. "We found that usage has increased across the platform, but the most improvement has been seen in users aged 25+."
Still, Snap’s stock price was down 1.31% to $19.92 per share through morning trading on Monday. Snap is currently a Zacks Rank #3 (Hold).
The positive news for the disappearing photo and video app company comes just days after an announcement that Facebook-owned Instagram’s Stories feature surpassed 200 million daily active users, which placed it well ahead of Snapchat’s reported 161 million users.
Despite the note pointing to Snapchat user engagement growth, it has not come at the expense of Instagram’s continued growth. According to the survey, 25% of the people said they spend "much more time on Instagram" vs. 20% who said the same about Snapchat.
Jefferies continues to give Snap a “buy” rating and maintains a $30 per share price target for the stock.
Other Potential Positives
The Jefferies’ note also pointed to Snapchat being able to bolster advertising revenue through the use of more highly targeted and engaging ads.
“We believe that Snap’s biggest driver over the coming 12-18 months will be its ability to leverage its massively engaged user base with greater advertising tools and driving its ARPU (average revenue per user) closer to peers,” the note said.
According to the note, Snapchat advertisements are most effective when there is a strong or immediate call to action. A Gatorade ad that ran during the US Open tennis tournament featuring an 8-bit tennis video game reported a click-through rate of 16%, which is almost 10 times more than the average Snapchat ad.
Since Snapchat makes most of its money through advertising, anything the company can do to improve the viability of its platform for advertisers is a good thing.
Snap announced that it is set to host its first quarterly earnings call on May 10. If you want to know more about Snapchat’s fight against its competition read: As Snapchat IPOs, Its Competition Is Stealing Its Best Ideas.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 "Strong Sells." Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>