Evan Spiegel, CEO and co-founder of Snap Inc.
Adam Galica | CNBC
Shares of Snapchat parent company Snap rose on Thursday after Bank of America said a recent spike in app downloads will drive better revenue results for the company’s upcoming second-quarter earnings.
“In May, Snap’s ‘gender-face-swap’ filter went viral and SnapKit app ‘Yolo’ reached number 1 on the iOS download charts, and 3rd party Snap app data in 2Q suggests downloads were near record levels,” Bank of America analyst Justin Post said in a note to investors. “Overall we anticipate improving user trends and revenue upside in 2Q, though we expect Snap to remain conservative in its outlook.”
Snap rose 1.4% in premarket trading from Wednesday’s close of $15.26 a share. The stock is up a staggering 177% since the beginning of the year, as it hit a 52-week low of $4.99 a share in December. However, Snap remains well below its 2017 IPO price of $24 a share.
Bank of America increased its price target to $17 from $12 on Snap shares but stuck to its neutral rating, saying there are “positive indications but high expectations.”
“We have been cautious on competition from Instagram and execution consistency given management changes, and underestimated the potential rebound in user activity in 2019,” Post said.
– CNBC’s Michael Bloom contributed to this report.