GOLDMAN SACHS: What everyone’s saying is Snap’s biggest problem isn’t really a problem

Snap CEO Evan Spiegel. Snap

Up and down Wall Street, banks have been warning about Snap‘s monetisation problems. But a report from Goldman Sachs analyst Heath Terry begs to differ.

Goldman, which raised its Snap price target to $US23 from $US18 following the company’s blockbuster fourth quarter, is confident based on Snap’s increased “visibility into pricing.” Snap’s recent move into creating programmatic ad technology put a dent in its ad pricing, but Goldman notes the shift, which has “weighed on monetisation growth in recent quarters, will naturally slow.”

Although CPM (cost per impression) was down 25% quarter-over-quarter, total ad revenue increased by 38% for that time period because the number of ad impressions grew four-fold over the past year.

Although the Goldman’s report warns of Snap’s volatility, the bank maintains the company’s “audience and engagement represent a unique asset that will benefit from the growth and diversification of internet usage and advertiser adoption.”

Snap priced its IPO on March 1 at $US17, and the stock reached a high of $US29.44 just two days later. Thestock then dropped sharply, bottoming at $US11.24 in August.

But shares began to rebounded as Tencent took a 10% stake following the company’s dismal third-quarter results and after the company announced a redesign to its app.

Snap shares are up more than 30% this year and trade above $US19 apiece.

Screen Shot $US19 Snap 2018 02 07 at 10.49.21 AM