Snap's Decline Post-Initial Earnings Print Offers A Compelling Entry; Oppenheimer Upgrades

Oppenheimer's Jason Helfstein feels Snap Inc SNAP's more than 20-percent decline in relation to its first ever earnings report as a public company marks a compelling entry point for investors.

Helfstein upgraded Snap's stock from Perform to Outperform with a newly established $23 price target as many aspects of the social media company's results came in better than he had expected:

• Overall revenue was 7 percent better than expected.
• North American revenue was 8 percent better than expected.
• North American daily active users figure was 1 percent better than expected.
• North American average revenue per user was 7 percent better than expected.
• European revenue was 1 percent better than expected.
• European DAU and ARPU were each 1 percent better than expected.

The analyst further noted that 12 of 26 brokerage firms who cover Snap had modeled the company's revenue to rise sequentially despite the regulatory S-1 filing cautioning of a seasonality in revenue.

What's Next For Snap

Looking forward, Helfstein believes Snap's search product could become "fundamentally transformative"; while adding a "real-time-update" vertical, which is "significantly more engaging" than Twitter Inc TWTR.

Also, a Snap-ad-manager release next month should bridge the gap between the company's on-demand geofilter product for micro-small-medium-size businesses/personal consumption and sophisticated API tools.

Bottom line, Snapchat's focus on "few-to-few communication" stands out in the social media landscape and acts as a "durable competitive differentiator" moving forward.

At time of publication, shares of Snap were down 20.84 percent at $18.19.

Related Links:

The Sell-Side Sentiment On Snap Ahead Of Its First-Ever Earnings Report

Snap's Earnings Report Reinforces Nomura's Bearish Initiation