Snap, Snapchat’s parent company, saw a sharp increase in the price of their stock from expected high ad revenues.
‘We are growing more confident that advertisers overseas are taking advantage of relatively low bid prices of inventory in the US,’ writes an analyst at BTIG Research, Richard Greenfield.
According to Greenfield, the increase in activity started in July 2018 and continued to December. He adds, ‘We suspect that advertisers in the US are moving from seeing Snapchat as a branding platform to a Snapchat as DR-performance platform.’
There is a risk on the long term though according to Greenfield. Performance advertising which grew from direct-response advertising is not seen as ‘high quality.’
For the long term though, he says, Snapchat will need to have advertisers who can convince them to invest in media performance.
The company’s last quarter of 2018 revenue went up 36% to get to $390 million.