Goldman Sachs is Betting on Snapchat

Goldman Sachs has put out a bullish note on Snapchat this week.

The firm’s analyst Heath Terry and his team have upgraded shares of the popular app company from “neutral” to “buy” and have cited better-than-expected user growth and engagement trends.

Goldman additionally raised their 12-month price target for the stock to $18 from $13 per share.

“We believe product improvements and feature additions are driving positive trends in user growth and engagement that, along with monetization improvement from ad tech initiatives, should drive upside to consensus estimates,” Terry wrote.

The firm also noted Snap’s new Android app, the launch of Snap Games and new viral lenses. May represented the first month that showed many new additions and there was a record of 41 million total app downloads.

This is “a stark reversal of what were otherwise multi-year lows in app downloads that the platform experienced through most of 2018 and early 2019,” remarked Terry.

On monetization Goldman commented, “Our checks with advertisers also lead us to believe that the company’s continued innovation in its ad-stack, particularly in self-serve, should allow SNAP to substantially improve monetization of user time spent on the platform over time.”

Shares of SNAP have gained almost 185% this year so far.