And on the ninth day, Snap bounced.
After eight straight days of declines that left shares of Snapchat’s parent company down nearly 15 percent, below their $17 initial public offering price, Snap’s stock on Thursday got a boost from a bullish analyst’s report.
Shares of the disappearing-photo app maker climbed 3 percent, to $15.69, after Stifel Equity Research’s Scott Devitt gave the stock a price target of $22, implying the company is worth $25.5 billion — $7.2 billion more than it was valued as of Thursday’s close.
Snap shares lately have been hammered over concerns about slowing user growth and recent moves by Facebook’s Instagram app to knock off some of its key features.
On Tuesday, the stock got crushed after Morgan Stanley, which led the company’s IPO in March, cut its rating on the shares to neutral from buy and slashed its price target to $16, down from $28.
Nevertheless, “we believe Snap’s business remains on track fundamentally,” the Stifel analyst wrote Thursday, adding that “near-term risks may be overstated.”
Research firm Instinet in June said Snap’s download growth had decreased 22 percent year over year. But the Stifel analyst wrote Thursday that “downloads of the Snapchat app have appeared relatively stable in all of the company’s key ad markets.”
The report also claimed that Snap’s app rankings are hanging with the heavy hitters in tech. Between Jan. 1 and March 29 of this year, Snapchat was ranked in the Top 10 most-downloaded apps in the 10 biggest markets 14 times, according to App Annie. Google’s apps made the list 17 times.
As for user growth, the report says, “We do not believe the wheels are falling off” and that “Snap’s user engagement remains strong.”
Users averaged 30 minutes per day on the app in the first quarter, according to Stifel, up from the 25 to 30 minutes Snap recently cited in an SEC filing.
Now, 12 research firms rate Snap a buy, five rate it a sell, and 17 say hold.