Snap Inc (NYSE:SNAP), the owner of social media app Snapchat, impressed with its first quarter earnings, sending its shares more than 26% higher.
Analysts at Wedbush have maintained their ‘Perform’ rating on the stock despite the surge, which they attributed to low investor expectations and initial improvements in Snap’s ad platform.
For Q2, Snap guided revenue up 15% to 18%, versus 1Q’s 21% and 2% above the Wall Street consensus.
They believe the company’s 2Q revenue guidance suggests a lack of confidence that ad demand will continue following its 1Q performance.
“This implies 2Q ad revenue growth of 10% at the midpoint versus 15% in Q1 and 14% in Q4,” they wrote.
“Furthermore, engagement remains weak with North America and Europe flat sequentially as all growth continues to be in the rest of the world which has weaker monetization.”
The analysts have a $14.25 price target on Snap.
Its shares traded 26.6% higher at $14.44 on Friday afternoon.