Is There Light at the End of the Tunnel for Snap Inc?

Snap Gaining 40.8% Share of US Social Network Users, as per eMarketer's newest projections

Snap Inc (NYSE:SNAP) has been hard at work to develop a highly engaging format attractive to teens and young adults and it appears the company’s efforts are paying off. With a report released from eMarketer yesterday suggesting that Snap is set to overtake users in the 12 to 24 demographic from both Facebook and its acquisition Instagram, shares spiked 7% yesterday.

Breaking down the report, analyst Kip Paulson of Cantor highlights that Snap looks to be adding speed, capturing a total of 40.8% of US social network users with monthly users to escalate to 25.8% this year, outpacing Instagram by 2%. Overall, the popular Snap app parent company is expected to grow to 15.8 million monthly users between the ages of 12-17 and 24.4 million users in the 18-24 age group.

Paulson notes, “Snap is gaining share among the highly sought after and hard-to-reach teens/ young adults demographic, according to eMarketer’s latest estimates released today, while mobile-friendly, vertical video shows on Snapchat continue to pick up steam with the launch of CNN’s daily news show ‘The Update’ last night. We view these developments positively, as Snapchat has proven itself as a highly engaging platform for younger users (40+ min/day for an audience largely unreachable on TV networks) and this level of engagement should only increase with the rapid rise of shows on Snapchat. Given early successes with NBC News’ ‘Stay Tuned’ (29M unique viewers in first month) and ‘Phone Swap’ (often 10+M viewers per episode), Snap is building a significant (and differentiated) video offering that could provide another incremental tailwind for ARPU over the next 12 months.”

Looking ahead, the analyst believes that the mobile app mogul has laid the foundation for meaningful upside potential for average revenue per user from 2018 onward.

As such, the analyst maintains an Overweight rating on SNAP with a $15.00 price target. (To watch Paulson’s track record, click here)

Tipranks analytics reveal SNAP as a Hold. Out of 27 analysts polled by TipRanks (in the past 3 months), 9 are bullish, 6 bearish, while 12 are sidelined on Snap stock. With a 5% upside potential the stock’s consensus price target stands at $15.31.

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