Snapchat’s Still a Buy, Says Leading Internet Stock Analyst
Everyone is down on Snap stock these days--everyone that is except Mark Mahaney, a well-known analyst with RBC Capital Markets who has tracked Internet companies for 20 years.
Speaking at Fortune’s Brainstorm Tech conference in Aspen, Colo. on Monday, Mahaney put forth a rare bullish case for the maker of Snapchat, which dropped below its $17 initial public offering price last month amid weak results that spooked investors. In Mahaney’s view, Snap skeptics are over-reacting to its current woes, which include fierce competition for and a failure to meet lofty earnings targets.
The tech company’s shares traded as high as $24 after it went public in March. But its stock is now in a trough closer to $15.
“When you have that kind of [growth] multiple, you can’t miss,” he acknowledged, but he said Snap share prices will rebound--and even double--by late this year or early 2018.
Mahaney’s optimism stems from his view that Snap remains an extremely innovative tech company, citing its latest product, a location sharing feature called Snap Map, as the latest example.
He also argued Snap is “dramatically under-monetized” compared to firms like Facebook and, especially compared to Twitter. Mahaney predicts the company will begin layering on money-making services, and will one day grow to a quarter the size of Facebook.
Mahaney did concede that, as an investment, Snap is “way out there” when it comes to risk and that he is an outlier in putting a “buy” label on the service, which has a devoted follower among teens and millennials, but has been losing ground to Facebook’s Instagram.
His buy prediction is a bold one but, if Snap shares hit $30 come early 2018, Mahaney might burnish his stock-picking reputation like never before.
See original article on Fortune.com
More from Fortune.com