Please ensure Javascript is enabled for purposes of website accessibility

Why Snap Shares Jumped Today

By Evan Niu, CFA - Mar 22, 2017 at 11:25AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Drexel Hamilton initiates coverage with a buy rating.

What happened

Shares of Snapchat operator Snap (SNAP -1.22%) have jumped today, up by 6% as of 10:45 a.m. EDT, after the company received a second buy rating from Wall Street.

So what

Drexel Hamilton analyst Brian White has initiated coverage on Snap with a buy rating alongside a $30 price target. White believes that Snap is uniquely positioned among millennials, which comprise 27% of the global population.

Building with Spectacles Bot banner

Image source: Snap.

Snap also has opportunities to expand into India and eventually China, according to the research note. The analyst has high expectations for revenue growth going forward, and as such believes shares are "attractively valued for healthy upside potential." Downplaying concerns about the young and relatively inexperienced founders, White points to many other tech giants that were founded by young entrepreneurs with limited experience.

Now what

This is Snap's second bullish rating this week, following Monness Crespi Hardt analyst James Cakmak earlier. Shares had flirted with the $30 threshold on the second public trading day earlier this month. The majority of ratings that have been set thus far have been neutral or bearish, typically citing extremely lofty valuation multiples. White is just one of two analysts thus far that does not think shares are overvalued. Considering how young the company is, the pressure is on for it to deliver and its future is fraught with uncertainty and risks as it attempts to grow its advertising business faster than its cloud infrastructure spending commitments.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Snap Inc. Stock Quote
Snap Inc.
$12.97 (-1.22%) $0.16

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.