Time May Be Ticking on Snap Investors' Enthusiasm

Snap (NYSE: SNAP), creator of the social networking app SnapChat, is making a comeback, and its daily active user growth and positive second-quarter earnings surprise are winning over some investors. Joining the optimistic chorus, Bank of America last week raised its rating on Snap shares from neutral to buy.

The Santa Monica, California, social media company has come a long way from the days that followed its March 2017 IPO, when its stock plummeted 28% below its offering price within the first two weeks. A heavily criticized late-2017 overhaul of its app didn't help matters. Many of its users took their social posting elsewhere, including to Facebook's (NASDAQ: FB) Instagram -- which had already been chipping away at its appeal. Advertisers couldn't figure out how to use Snapchat, let alone market on it, further hurting Snap's business outlook and its stock price.

But more recently, the company has been on an upswing. The stock, while still trading below its initial public offering price, has surged from $5.51 a share at the start of the year to about $14 a share now (a 154% gain). Beyond the strong results already in the books for 2019, management has expressed optimism about the remainder of the year. And some of its new features are resonating with users. Two lenses it released this year -- one that lets customers see how they would look as a different gender and another that morphed them into babies -- were used by millions of people.

Source Fool.com