A Snap Bear Responds To The Bull Thesis

Nearly a month after initiating Snap Inc SNAP coverage with a Sell rating, and amid a Monday deluge of bullish analysts notes, Pivotal Research Group’s Brian Wieser told Benzinga he stands by his initial thesis and $10 price target.

Wieser foremost expressed skepticism in the theory that hardware products and platform innovation, such as Spectacles, will catalyze significant growth.

“There’s no good basis to assume this yet,” he said. “Not impossible, just not developed enough to model.”

See Also: Wall Street May Not Be As Bullish On Snapchat As It Seems

Regarding the Street’s 2018 revenue estimate of $2 billion — a figure not too “meaningfully different” from Wieser’s $1.855 billion estimate — the analyst took issue with bullish model to reach the high valuation.

“I disagree strongly with the idea of looking at a revenue base in terms of revenue per user,” he said. “No advertiser budgets on that basis.”

Still, not all optimistic commentary met opposition. A number of bulls suggested Snap would benefit from digital ad growth in spite of slowing user trends, and Wieser agreed that the two measurements aren’t wholly related.

“SNAP should benefit from growth in digital budgets,” Wieser said. “User growth is independent of that fact, and Snap’s ability to monetize its user base is independent of growth in the user base.”

The stock closed at $23.83, up 4.8 percent.

Taylor Cox contributed reporting.