Aegis analyst Victor Anthony might have concerns that are “eight-fold” surrounding Snap Inc (NYSE:SNAP), he nonetheless believes the ad gains awaiting the popular Snapchat maker will offset its struggles. As such, pre-IPO, the analyst initiates coverage on SNAP on a fair value of $22.

Predominantly, Anthony underscores sluggish user growth and steep competition from rival Facebook Inc (NASDAQ:FB) as his top apprehensions circling Snap, especially considering Facebook has entered into the ring like product features. For the analyst, the ultimate risk lies here, as Snap’s enticing demographic following could swap loyalties to one of Facebook’s features instead. Additionally, the analyst fears weakness in Snapchat’s ecosystem (or lack thereof); an ad mix weighing closer to the brand side of the spectrum rather than response; below par ad targeting functions when sizing up Facebook and Alphabet Inc (NASDAQ:GOOGL); a cloud of apprehension settling on advertisers who see investing in the platform as simply exploratory; an unclear profitability trajectory; and lack of clout for investors.

“That said, we conducted extensive checks within the ad industry and find that marketers are enthusiastic about the prospects of creating ads to get in front of Snap’s coveted demographic. As such, we see Snap as a sustained ad share gainer over the next two years. That alone should be enough to lead to upside to the offering price range this year while management works to solve most of the above issues,” asserts Anthony.

Especially when considering 60% of Snap’s demographic ranges between users of 13 and 24 years old, the analyst commends the “coveted demographic” as the company’s “most valuable asset.” Anthony concludes, “Advertisers view that demo as trend setters and their view is that the sooner they attach their brands to those users, the longer those users stay with their brands. Advertisers also view Snap’s video-centric platform and vertical video ad format as key differentiators. That enthusiasm by marketers leads us to believe that Snap is likely to improve its monetization throughout the forecast period in our model.”

By 2020, the analyst projects revenues to reach $4.5 billion, adjusted EBITDA to hit $850 million, as well as margins of 19%.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst Victor Anthony is ranked #144 out of 4,501 analysts. Anthony has a 65% success rate and garners 12.3% in his yearly returns.