Why did SNAP Gain More Than 7% on Friday?

American camera and social media company Snap, Inc. (SNAP) gained more than 7% during Friday’s intraday trading session, after Piper Sandler analyst Thomas Champion gave optimistic insights into the company’s addressable user details.

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After riding higher on the day, the SNAP stock ended the day up 3.9% at $37.39 on April 1. Year-to-date, the stock has lost 19.8%.

Snap reported stellar fourth-quarter results at the beginning of February, surpassing both earnings and revenue estimates, and has gained roughly upward of 51% to date.

Analyst Sees Compelling User Growth Opportunities

Analyst Champion undertook an extensive study of country-wise user growth opportunities for Snap. His study revealed that Snap has an overwhelming opportunity to grow its user base in Mexico (31% penetration), Brazil (9% penetration), Italy (12% penetration), and in Spain.

Additionally, Champion noted that India and the U.S. are the most important markets for Snap. As per the analyst, Snap has an estimated 800 million-plus addressable monthly active users (MAU) across the top 15 GDP countries. Excluding India, this number stands at 500 million-plus. On a global basis, Champion estimates a total addressable market of more than 1.9 billion MAUs.

In Q4, Snap’s Daily Active Users (DAUs) grew 20% year-over-year to 319 million, marking the fifth straight quarter of 20%+ growth in DAUs, with North America growing 6%, Europe increasing 11%, and the Rest of World jumping 41% on a year-over-year basis.

Despite his long-term estimates for the daily active user base being above consensus estimates, Champion remains highly optimistic about his stance. The analyst reiterated a Buy rating on the SNAP stock with a price target of $53, which implies 41.8% upside potential to current levels.

Meanwhile, other analysts on the Street are cautiously optimistic about the stock. The SNAP stock has a Moderate Buy consensus rating based on 21 Buys and nine Holds. The average Snap price target of $53.64 implies 43.5% upside potential to current levels.

Hedge Funds

Similar to analyst Champion, hedge funds are equally optimistic about SNAP stock. According to TipRanks’ Hedge Fund Trading Activity tool, confidence in Snap is currently Very Positive, as 13 hedge funds increased their cumulative holdings of the SNAP stock by 18.7 million shares in the last quarter.

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