Credit Suisse: Snap Stock Is A Risk Worth Taking

Snap Inc SNAP remains a story stock for now, but Credit Suisse believes that story will have a happy ending. Credit Suisse analyst Stephen Ju has initiated coverage on Snap with an Outperform rating and says the stock is a risk worth taking for investors.

Ju highlights three reasons the firm loves Snap stock:

1. The firm estimates upside of roughly 32 percent compared to downside of only around 21 percent.
2. The company’s younger customer base is an extremely valuable demographic for advertisers.
3. Snap should be able to expand margins in the long term.

Despite the potential bullish drivers, Ju issues a word of caution to Snap investors.

Cautionary Tale

“We also point out that investing in SNAP shares, in our view, is high-risk/high-reward given the presence of a long list of well-heeled global competitors, and the potential for the migration and/or the failure to hang on to its existing user base or scale advertising revenue through ongoing product development,” Ju explained.

However, he noted that investors should be able to keep a close watch on Snap’s monetization process via the company’s quarterly earnings reports. In the meantime, Ju expects the wild swings in Snaps share price to continue.

Credit Suisse now has a $30 price target for Snap.

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