3 Factors Weighing On Snap Shares

Snap Inc (NYSE: SNAP) “announced it has introduced a search function for its Stories, which should make it easier for users to discover new content, increase the level of engagement, and eventually open up a new ad product for sponsored Stories,” Loop Capital’s Blake Harper said in a note, while maintaining a Hold rating on the company, with a price target of $21.

Potential For Ads

The analyst expects Snap to introduce a sponsored Stories product in the near future, which would show up in search results and provide advertisers with “higher intent based targeting opportunities and support the company's projected revenue ramp.”

Harper noted that Facebook Inc (NASDAQ: FB) had, last week, introduced various new features on its main app that copy some of the key features of Snapchat.

Facebook’s ‘Copycat Machine’

“Facebook's new camera effects and Stories features will likely see modest engagement from users but we believe the strategy could stunt Snapchat's growth potential by limiting social app users' desire to switch to another app at any given time,” the analyst stated.

In addition, Facebook’s new Direct feature also resembles the way photos and videos can be shared with one or more friends on Snapchat.

Harper believes this copying of multiple camera features from Snapchat might make its more challenging for Snap to drive user growth.

Deal With NBCUniversal

Snap has also reportedly signed a deal with NBCUniversal to create unique content, as well as sell ads on Snapchat for the 2018 Winter Olympics.

The analyst believes this deal expands on an agreement between the two companies from the last Summer Olympics, with which Snap is “positioning itself as the primary viewing ‘channel’ for content that traditionally has been viewed on broadcast and cable TV.”

This deal would also help NBCUniversal sell Olympic-related geofilters and lenses to advertisers for the very first time. In fact, Harper sees Snap as being “forward thinking by distributing Olympic content widely across its online properties and its NBC Sports app.”

Related Links:

Snap Shares Are Priced For Flawless Execution

Why Co-Founder Evan Spiegel Didn't Sell Snap