A day after Snap Inc.’s biggest run on Wall Street since it debuted in March, shares of Snapchat’s parent company continued to rocket upward on Thursday, closing up 3.3 percent to $16.51.
After months of languishing below its IPO price of $17, Snap is back on the cusp of passing the mark, darting up more than 15 percent this week.
It’s not just the immense popularity of Snapchat’s dancing hot dog that’s pushing its stock higher, either. Here are three reasons why investors have suddenly fallen back in love with Snap.
1. Gaining Advertiser Strength
Snap was shredded in its first two quarters as a public company for failing to hit analyst estimates on revenue. CEO Evan Spiegel even talked about the need for increased “education” among advertisers on why Snapchat is a good platform to do business with.
Now, the winds appear to be changing. Credit Suisse analyst Stephen Ju said in a note to investors on Wednesday the company has “bolstered” its appeal to advertisers, adding self-serving ad tools and buying a startup that tracks the impact ads have on in-store foot traffic.
“While we concede that it has taken longer than anticipated,” said Ju. “We submit that Snap is taking the necessary steps in the background to reduce friction against incremental ad budget allocations.” Translation: advertisers like where Snap is headed.
An individual with knowledge of Snap’s ad business recently backed up this belief, telling TheWrap it expects to see a healthy increase in ad revenue as the company enters the final months of 2017.
2. Smells Like Teen Spirit
Another feather in Snap’s cap: the kids still love it. A Piper Jaffray research survey this week highlighted Snapchat’s continued popularity with Gen Z’ers. Nearly half (47 percent) of the 4,100 teens polled said Snapchat is their preferred social media platform. That’s a massive lead on both of its chief rivals, Instagram (24 percent) and Facebook (9 percent).
Perhaps most impressive for Snap, though, is its continuing to gain steam; its preference among teens is up 12 percent year-over-year. Those Snapchat bunny face filters are never going away.
3. New Stuff
Snap is always looking for new ways to keep users engaged in its app. Its latest feature, “Context Cards,” is a step towards making it harder for users to close the app once they’ve started snapping. Users can now interact with certain restaurant filters to see reviews or book a table — or even book a reservation with TripAdvisor if their friend’s vacation looks sweet. The update also lets Snapchatters book an Uber or Lyft directly from the app — no need to toggle back and forth anymore.
The longer people stay in the app, the more they interact with ads. That’s good for Snap’s biz, and Wall Street is taking notice.