Tech stocks helped lift markets to new highs throughout 2017, with the likes of Amazon (NASDAQ:AMZN) , Facebook (NASDAQ:FB) , and Alphabet (NASDAQ:GOOGL) playing a pivotal role in the rally. But one of the most noteworthy and highly anticipated tech IPOs of 2017, Snap Inc. (NYSE:SNAP) , has failed to live up to expectations.
However, shares of the young, struggling social media company surged on Monday on the back of a positive analyst note.
Monness, Crespi, Hardt & Co. analyst James Cakmak wrote to clients that Snap is likely to grow its advertiser base and develop a larger ad inventory. He also pointed to the company’s growing daily active user base and its relationship with Tencent Holdings (TCEHY) as reasons to be more optimistic about Snapchat’s parent company heading into 2018. The Chinese technology powerhouse, which owns WeChat, now holds a 12% stake in Snap.
The analyst also noted that he thinks the company is in a position to beat Wall Street estimates going forward. Following the note, shares of Snap hit $16.22 per share, which marks a 7.63% increase from Friday’s closing price.
This might make some investors start to think that now could be a good time to jump on Snap stock before a possible 2018 revival.
Other Recent Moves
Before Monday’s positive movement, Snap had already seen its stock price soar 21.73% in the last four weeks. And just last week, Barclays (LON:BARC) (BCS) analyst Ross Sandler upgraded Snap and upped his price target from $11 per share to $18 per share.
Sandler noted that the company’s nearly complete redesign of its Snapchat app for Android devices should increase the messaging app’s use on the popular operating system. The Barclays analyst also wrote that he thinks the company’s Promoted Stories feature will help increase advertisings sales.
Furthermore, Sandler pointed to the app’s young user base as a major reason for his optimistic take on Snap. "At the end of the day the reason marketers should continue to come back to SNAP advertising is because of the stranglehold on the younger demographic, which even Facebook/IG can't match," Sandler wrote.
Snap is currently a Zacks Rank #3 (Hold) and sports an “F” VGM score based on its low Value, Growth, and Momentum grades.
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