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Two out of 13 isn’t bad, apparently.
Shares of Snap, the parent of disappearing messaging app Snapchat, bounced as much as 9 per cent higher on Wednesday after the company received a second “buy” recommendation from analysts in the wake of its closely watched stock-market debt.
Since its IPO earlier this month, Snap has received a total of 13 analyst ratings, according to Bloomberg data. Until this week, none of them put a “buy” on the company’s shares. But that changed on Monday, when James Cakmak at Monness Crespi Hardt initiated coverage of the company as a “buy” and a $25 target price, writing:
“We recognize we are potentially giving too much credit for unproven skills in building a business, rather than just a product, but we see more to Snap than many suggest. There is substantial execution risk, but we’re prepared to give the benefit of the doubt at this stage knowing what we know about Snap, and knowing what we know about the efforts of competitors.”
And yesterday, another firm, Drexel Hamilton, kicked off its Snap coverage with a “buy” rating. Analyst Brian White wrote:
“Although other social messaging platforms enjoy a much higher user base, we believe Snapchat has a cachet with millennials that will be difficult for other platforms to garner. Moreover, we believe there is significant opportunity for the Snapchat ‘pixy dust’ to spread overseas and across generations in the coming years.”
Prior to those notes, Snap shares had received a variety of ratings from “neutral” to “underweight” to “sell”. Analysts working for the IPO’s underwriters, led by Goldman Sachs and Morgan Stanley, typically do not issue reports until a month after trading begins.
By pixel time, Snap shares were up 6.4 per cent to $21.68, still slightly off from its $24 opening price on the New York Stock Exchange.