As a result of upgrading the stock because of its advertising sales, Snapchat shares rose by 11.6% on Thursday, March 14th.
Richard Greenfield, a BTIG analyst now suggests investors buy snap shares as he believes that the stock prices are likely to soar as high as fifty percent within the next year. Mr. Greenfield said: “Your initial reaction is likely why now and what changed, as virtually everything that could go wrong for Snapchat over the past couple years since going public has gone wrong. Performance advertisers are laser focused on return on investment and spend (and spend more) where they see a compelling return.”
He also added, “We are increasingly confident that overseas direct response/performance advertisers are taking advantage of low relative bid prices on ad inventory in the U.S.”
In the last few months, Snapchats’ shares surged beyond their estimation, by twenty-five percent. This unexpected rise was due to its strong advertising revenue.
Snapchat has added some special features to help generate more revenue like the 6-second commercial advertisements that cannot be skipped, some collection ads, a few product catalogs for electronic trading, and the Snap Pixel. Snapchat also improved its model for machine learning for installing applications and events for lower-funnel bidding that in return generated more revenue.
Regardless of losing almost a million daily active users YOY, Snapchats’ earning loss per share has decreased by sixty-five percent and the revenue has also grown by thirty-six percent YOY. Furthermore, Snapchats’s average profit per user was found to be USD 2.09, which was, once again, higher than estimates.
Greenfield further said, “The good news for Snapchat is that performance advertising can scale rapidly enabling meaningful revenue beats. It is critical for Snapchat to convince higher quality brands of the performance ROI that can be found on the platform.”
This year, the snap shares have increased by 104.72% so far.