What's Going On With Snap Stock Wednesday?

Snap Inc. SNAP shares are trading higher Wednesday, while the broader market moves lower. The stock seems to be benefiting from an upgrade from JMP Securities.

The Details: JMP Securities analyst Andrew Boone upgraded Snap from Market Perform to Market Outperform and set a price target of $17.

In a new note, Boone explained that with Snap set to launch Simple Snapchat and Sponsored Snap, the company could see greater user engagement, a higher number of ads displayed and ultimately greater revenue.

The analyst projected that the launch of Sponsored Snaps could lead to $180 million of incremental ad revenue. The projection is based on a North American-only roll out and assumes five ad displays per day per user.

The analyst expressed confidence that the simplified user experience introduced by Simple Snapchat will enhance user engagement. Specifically, Spotlight will be easier and faster to access. The analyst believes that ads will feel more “native” in this context, compared to Snap Stories, where they seem like an “inserted break” in the content flow.

“Additionally, our checks with larger performance advertisers also are coming back favorably as we believe Snap’s direct response product improvements are gaining traction,” Boone said.

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The analyst acknowledged concerns about the quality of content on Spotlight and the effectiveness of its algorithm in recommending videos and noted that Wednesday’s upgrade could be a quarter early, given the uncertainty surrounding the timing of the rollout of these products and early reaction from users.

JMP Securities’ new $17 price target is based on a 25 times multiple on 2026 EBITDA estimates.

SNAP Price Action: At the time of publication, Snap stock was up 0.95% at $10.08, according to data from Benzinga Pro.

Photo: courtesy of Snap.