Snap Inc (NYSE:SNAP) is an ideal candidate to go private if it can’t reverse its usage trends and improve monetization according to analyst firm, Pivotal Research. “Our take is that it is not too late for management to find ways to reverse recent usage trends and generally improve monetization regardless of those usage trends,” CEO, Brian Weiser said in a note sent to the research firm’s clients on Friday.
Snap’s Troublesome User Base
“The data we look at is showing a widening user base, although one which is collectively reducing its time on the platform,” the CEO remarked. He further added that if Snap is not able to improve the ad revenue numbers and keep people longer on its app then the company will become an attractive candidate to go private at the current price level of the stock.
SNAP is still a buy
Pivotal research also says that all the negative news about the company has already been priced in and shares are expected to rebound and improve over the next months. The analyst firm has upgraded Snap from a hold to buy. It however lowered its target price from $9 to $8 which is 12% above the current price which the company is trading.
Snap, the parent company of the popular App snapchat shares rallied on Friday after receiving the upgrade from the analyst firm. The company shed $20 billion in market capitalization since March 2017 when it first went public. The firm’s main app Snapchat has straggled to attract new users. It is facing heaving competition from Instagram and Facebook which have added similar features to that of snapchat.
Snap’s bid to improve its monetization
In a bid to save its dwindling ad revenue Snapchat on Wednesday announced new scripted shows which will include six unskippable ads. Analyst Michael Nathanson of MoffetNathanson had earlier tweeted that the company wasn’t prepared for life as a publicly traded company and cut the 2019 revenue estimate by 7%.
On February 2018 snapchat’s app redesign caused the first plunge in daily users. Evan Spiegel the CEO of snap was even skeptical of the decision to redesign the app. In a memo sent to employees of the company he confessed that the decision was rushed.