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June 18, 2019, 11:50 a.m. EDT

Snap stock surges after BTIG hikes target to a Street-high $20

Analyst is upbeat about games, filters, and new ad tools

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By Emily Bary


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Snap Inc. shares continued their big rally on Tuesday after an analyst expressed increased optimism about the technology company’s latest attempts to monetize its platform and drive user growth.

Known originally as Snapchat Inc. until September 2016, the company is best known for its messaging app which has 190 million daily users, but also has other products such as Spectacles, Bitmoji and Zenly.

BTIG analyst Richard Greenfield upped his price target on the stock to $20 from $15 in a Tuesday note to clients, becoming the most upbeat analyst on Wall Street. Snap shares /zigman2/quotes/205087158/composite SNAP +0.54%  were up 8% in morning trading.

“We believe street expectations for user growth and revenues/Ebitda are simply too low, with far too many investors continuing to ignore Snapchat’s recovery, driven by repeated overpromising/missing expectations during Snapchat’s first two years as a public company,” Greenfield wrote.

Among the reasons for his increased enthusiasm are Snap’s recent efforts to engage users, which include Snapchat filters that realistically transform someone into a different gender or age as well as new games.

The multi-player games could help Snap boost its monetization of the “chat” side of the Snapchat app, which has historically been the preferred way that users engage with the app but which has lagged behind publisher-created Discover content in terms of revenue opportunities.

“Discover clean-up is well underway with an enhanced focused on premium content partners and a reduction in low-quality, clickbait influencer content,” Greenfield wrote.

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Snap also struggled for more than a year to engage Android users and redesign its app to suit this customer base, but Greenfield said that its latest iteration “has meaningfully improved Android user sentiment toward Snapchat.”

On the ad front, Greenfield is encouraged by Snap’s efforts to “create a high-value advertising opportunity for top brands” through its new Snap Select platform, as well as the company’s ongoing momentum with direct-response advertising.

Don’t miss: Snap stock extends rally after Pivotal upgrade

Snap shares have gained 166% so far this year, while the S&P 500 /zigman2/quotes/210599714/realtime SPX +2.28%  has climbed 17%.

/zigman2/quotes/205087158/composite
US : U.S.: NYSE
$ 11.27
+0.06 +0.54%
Volume: 19.93M
April 2, 2020 6:30p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$15.92 billion
Rev. per Employee
$409,309
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/zigman2/quotes/210599714/realtime
US : S&P US
2,526.90
+56.40 +2.28%
Volume: 3.87B
April 2, 2020 5:11p
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Emily Bary is a MarketWatch reporter based in New York.

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