Gender Face Swap Filter Is a Windfall for Snapchat
After a difficult first year and a half on the public market, Snap (ticker: SNAP) stock has been on fire so far in 2019, gaining 183 percent year-to-date. That strong performance may continue in the near term thanks to a new viral Snapchat filter that has been a shot in the arm to app downloads.
On Thursday, Bank of America analyst Justin Post raised his price target for Snap by 41% from $12 to $17 and says the gender face swap filter launched in May is having a significant impact on Snapchat downloads.
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"Snap's gender face swap filter went viral and SnapKit app Yolo reached No. 1 on the iOS download charts, and third-party Snap app data in (the second quarter) suggests downloads were near record levels," Post says.
Data from SensorTower indicates Snapchat's second-quarter app downloads were up 67% from a year ago and 64% compared to the first quarter. Those numbers include a 48% quarter-over-quarter increase in North American downloads.
As a result of the latest data, Post has raised his second-quarter estimate for Snap daily active users from 191 million to 197 million. Snap reported 190 million DAU last quarter.
Post has also raised his 2019 and 2020 revenue estimates from $1.62 billion and $2.08 billion to $1.64 billion and $2.18 billion, respectively.
Despite the positive data, Post says Snap's huge 2019 rally and high market expectations suggest the stock is a risky bet ahead of its second-quarter earnings report expected out on July 23.
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Nomura Instinet analyst Mark Kelley says investors will also be looking for updates on how well the Snapchat Android update is performing.
"The main focus for Snap remains the Android rebuild and upside from the gender swap filter and new games and audience network revenue," Kelley says.
Bank of America has a "neutral" rating and $17 price target for Snap. Nomura Instinet has a "neutral" rating and $10 target for SNAP stock.
