Please ensure Javascript is enabled for purposes of website accessibility

Why Snap Stock Jumped Today

By Evan Niu, CFA - Jun 18, 2019 at 12:02PM

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

BTIG increased its price target on the Snapchat parent.

What happened

Shares of Snap (SNAP 2.07%) have jumped today, up by 9% as of 11:20 a.m. EDT, after BTIG boosted its price target on the stock. Analyst Rich Greenfield says his firm's "conviction in the company's recovery has meaningfully increased."

So what

After being skeptical for quite some time, Greenfield turned bullish and upgraded his rating to buy in March alongside a $15 price target. The analyst is now increasing Snap's price target from $15 to $20, in part because many investors are "continuing to ignore Snapchat's recovery," in Greenfield's view. He understands why investors might still be skeptical, since the company has a history of overpromising and underdelivering.

Lens Explorer on Snapchat

Image source: Snap.

That dynamic may be changing. "Snapchat has done a good job keeping expectations low, enabling them to outperform expectations," Greenfield writes. The analyst also increased revenue and earnings estimates in the years ahead.

Now what

BTIG points to eight potential catalysts that could continue pushing shares higher: Snapchat has become more open to third-party developers releasing content on its platform, the company continues to release innovative new augmented reality (AR) face filters, the casual gaming platform is starting to roll out, premium content quality is improving, the revamped Android version of Snapchat continues to perform well, the company has new ad offerings like Snap Select, the advertising business continues to scale with attractive prices, and internal morale is improving.

The $20 price target is derived from fiscal 2022 estimated adjusted EBITDA ($1.3 billion) using a multiple of 25 and discounted back at a discount rate of 15%.

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.
SNAP
$23.20 (2.07%) $0.47

*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 service.

Stock Advisor Returns
327%
 
S&P 500 Returns
116%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/20/2022.

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.