Analyst Upgrade Rating on Snap Shares Due to Redesign Plan

Snap Inc shares, which have declined over the past couple of months and have also remained mostly down since its IPO launch last year, have recently received a stock upgrade and a renewed outlook from analysts regarding its shares.

A Wall Street analyst gave an upgraded rating on Snap shares due to the company’s plan and announcement to reverse its recent redesign. The company previously revamped the interface of its application as part of their efforts in trying to win back users. However, the redesign only confused most users who stated that it has made it more difficult for them to check celebrity or top account posts.

According to the analyst, the rating for Snap shares was raised due to the plans of the company to reverse its recent redesign which may contribute to its user growth and the company’s overall numbers.

Another analyst also stated that Snap shares are seen to recover and improve as the company reverses its current interface design therefore contributing to user growth and overall outlook on the company which is the reason for their upgrade on Snap’s stock also based on concerns of its recent sentiments being reflected by the overall outlook on the company’s metrics.

Other factors including a shift of the company to a programmatic advertising model as well as the launch of a new Android app and a better organizational structure may contribute to the company’s situational recovery.

Snap Shares Movement

The stock of the social media company have declined by around 27.6% through last Friday’s trading session. The stock fell 16% earlier this month when Snap Inc posted an earnings report that fell short of most analyst forecasts for its revenue as well as user growth or numbers. The stock was last seen trading up by more than 1% to $10.71 per share. This is down from its initial public offering price of $17 per share where the stock rose 45% higher during its first day as a public company.

Snap Inc was able to raise more than $20 billion for its valuation back then. Currently, Snap Inc’s valuation is standing at around $13 billion as the company faced a declining user growth, advertising revenue, and massive losses.

The outlook on the company prior to its IPO launch were mostly positive and was stated to be one of the biggest technology IPOs but has turned to the downside due to Facebook’s launch of its version of disappearing videos and photos which also has been incorporated to Facebook subsidiary Instagram. 

Its continuous expansion last year also contributed to their losses and have pushed its shares down throughout last year when the company reported numerous missed earnings report which contributed further to the decline of Snap shares. 

While Snap posted its first earnings beat last February delivering a slight user growth as well as a better revenue and lesser losses for their fourth quarter earnings. Despite this, Snap’s recent earnings report earlier this month revealed another weak quarter including a decline on its earnings and user growth brought largely by its redesign. 

Due to the company’s recent announcement of possibly reversing its redesign, Snap shares may recover from the loss of users as well as be able to raise its advertising revenue for the current quarter.

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