Citigroup Inc. (NYSE: C) upgraded Snap’s (NYSE: SNAP) stock on Monday, citing accelerating advertising revenue and better profit expectations surrounding the upcoming launch of a new version of its app for Android, as per CNBC.
Analyst Mark May changed his rating from sell to neutral, as a growing number of advertisers are optimistic in the platform’s ability to showcase media. May also increased his 12-month price target on Snap shares to USD 7 from USD 6, implying more than 11% upside from Friday’s closing price of USD 6.28. The stock rose more than 2% in premarket trading following the upgrade.
The advertisers and agencies “we speak with are generally optimistic about the outlook for the platform, including stating that policy changes have made it easier to distribute content,” May wrote. “Advertising average revenue per user accelerated in the third quarter (both in the U.S. and Internationally), which bodes well, especially if user growth likewise improves later in 2019.”
According to Yahoo Finance, Snap’s stock has fluctuated greatly as the Company faces fierce competition from Instagram, which co-opted Snapchat’s Stories feature. In an effort to re-entice users, Snap’s Chief Executive Officer Evan Spiegel admitted that the Company “rushed” a redesign of its app last year. Users were extremely disappointed with the update, which caused the Company to scrap much of the plan.
While Instagram has dethroned Snapchat as most popular among teenagers in 2018, the past 12 months have been tough for the social media Company amid the departure of notable executives, as stated by CNBC. Still, analysts are hopeful that the redesign to Snapchat’s Android app may attract new users in countries with a smaller proportion of Apple IOS users.