Snap Inc.’s (NYSE: SNAP) shares rose by 3.9 percent after a Wall Street firm upgraded its price target, saying that the worst for the company could be over.
MoffettNathanson analyst Michael Nathanson raised its rating for Snap to neutral from sell for shares and raised its price target from $7 to $9, saying that the reverted platform user interface will draw in more users as well as bringing back old users.
“We are upgrading Snap,” analyst Michael Nathanson said in a note to clients Monday. “Several factors could potentially improve Snap's situation throughout the year, including the redesign of the app redesign, completion of the shift to a programmatic advertising model, launch of the new Android app and a leaner organizational structure.”
Snap shares plummeted in early May after reporting its quarterly financial results and redesigning its UI, which costed the company many users.
Snap CEO Evan Spiegel intended the redesign to separate friends and family content from content creators, instead it resulted in protests against the new layout as millions of users asked for it to be reverted back.
The redesign also gave advertisers its own page on the platform, which Snap thought it would drive in more advertising revenue. Despite the changes, the company said ad revenue was not heavily affected, but Snap Chief Strategy Officer Imran Khan said it “created some headwinds in our revenue.”
Snap’s sluggish results since its IPO have led investors and analysts doubtful of the company to be able to profit, leading it to look into another form of ads.
A Snap spokesperson also confirmed previously that the company will test new content called Commercials, which will run six-seconds ads on the Discover page and user-generated stories and possibly be unskippable.
Snap shares are down 26.2 percent this year.