Snap Inc (SNAP) May Have Unleashed a Positive Revamp of the Snapchat App, But This Analyst Is Not Buying into the “Modest” Change

Wells Fargo's Peter Stabler is encouraged by Snap's user experience simplification, but says the update is not in the league of "evolutionary."

Snap Inc (NYSE:SNAP) has transformed its social media Snapchat app in a big way, offering a clear division between personal conversations and content from branded and celerity comment. CEO Evan Spiegel cheers this as a revolution, with the content feed makeover following the concept of a personalized newsfeed that changed the game in sharing and consuming content.

For Wells Fargo analyst Peter Stabler, this redesign marks “an evolution,” however, and “not [a] revolution.” In transitioning all content from friends to the home screen’s left side, with Discover content and influencer/creator Stories shifted to the right side of the Camera screen, this is a “modest update” that could positively streamline the user experience. However, the changes are not so monumental as to magnify the social media darling of the millennial court’s appeal past its current demographics.

As such, the analyst reiterates a Market Perform rating on SNAP stock without listing a price target. (To watch Stabler’s track record, click here)

Stabler highlights, “While we have not yet had the opportunity to personally review the app update (press reports indicate Snap will be gradually rolling out the update in coming weeks), our initial take is that the update: 1) should modestly simplify the Snapchat user experience; 2) should make Discover content slightly more accessible/visible within the app (one swipe away from the home screen, vs. two previously; and influencer content may draw more users into Discover); 3) by mixing Stories and Chats from friends, may potentially increase advertising exposure to users who use Snapchat primarily as a messaging app.”

Ultimately, “While we view simplification of the Snapchat user experience as a positive, we view the changes here as too gradual/evolutionary to trigger a significant broadening of Snapchat’s appeal beyond its core demos/geos. Potential impact on monetization from the update is not entirely clear, but we would figure to be modest as well,” Stabler concludes.

Wall Street takes Stabler’s stance here in playing it safe on the tech player, as TipRanks analytics model SNAP as a Hold. Out of 23 analysts, 5 are bullish on Snap stock, 12 remain sidelined, while 6 are bearish on the stock. With a loss potential of nearly 2%, the stock’s consensus target price stands at $13.31.

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