Snap got a slew of positive verdicts from Wall Street this week — but a month into its life as a public company, analyst sentiment resembles the troubled Twitter more than the successful Facebook after their respective IPOs.
Shares of Snap jumped nearly 5 percent on Monday after some research departments of the banks that led its IPO endorsed the stock. Morgan Stanley offered an overweight rating on the image sharing company, while Goldman Sachs and Deutsche Bank gave the stock a buy. Credit Suisse also issued an outperform rating, though JPMorgan rated it neutral. Firms involved in a stock's public offering aren't allowed to issue recommendations during a quiet period.
Snap's ratings may have gotten a boost as underwriters chimed in, but 62 percent of analysts surveyed by FactSet still have a hold or a sell on the stock. By comparison, 69 percent of analysts had a hold or sell rating on Twitter in the month after its quiet period ended; whereas for Facebook, just 54 percent of analysts had a hold or sell on the shares.
While Snap CEO Evan Spiegel has pushed back on comparisons to Facebook and Twitter, investors have drawn parallels with the companies' digital ad-based model and social, viral platforms. That's left Snap to stare down two very different potential outcomes: Facebook, which priced its IPO at $38, closed at $140.32 a share on Monday. Twitter, which priced its IPO at $26 per share, closed at $14.99 on Monday.
Here's how the three were viewed in the weeks after the IPO:
Snap
In total, out of 29 analyst ratings listed in FactSet, Snap has:
- 11 buy or overweight ratings
- 12 hold ratings
- 2 underweight ratings
- 4 sell ratings
Source: FactSet
That means:
- About 38 percent of analyst ratings are buy ratings
- About 41 percent are hold ratings
- About 21 percent are underweight or sell ratings, according to FactSet.
Bulls say: "SNAP's engaged/hard-to-reach millennial users and unique video offerings should attract significant ad dollars." — Morgan Stanley.
Bears say: Snap faces an "increasingly competitive social media landscape." — JPMorgan.
Shares on Monday closed at $23.83, above the IPO pricing of $17.
Twitter's IPO backers first issued ratings on Dec. 2, 2013. Lead underwriters Deutsche Bank and Goldman Sachs recommended buying the stock, while Morgan Stanley and JPMorgan issued the equivalent of hold ratings, and Bank of America Merrill Lynch initiated with a sell rating.
At the end of December 2013, Twitter had 26 ratings listed in FactSet:
- 7 buy ratings
- 1 overweight rating
- 12 hold ratings
- 2 underweight ratings
- 4 sell ratings
In other words:
- About 31 percent of Twitter's ratings were overweight or buy
- 46 percent were hold
- 23 percent were underweight or sell.
Bulls said: "While competition for users' time is fierce and Twitter's growth trajectory is unlikely to be linear, we believe these revisions will, over time, justify considerable upside beyond the share current price and valuation." — Goldman Sachs.
Bears said: "With a price that pushes into the high 30s and beyond, Twitter is simply too expensive." — Pivotal Research.
Shares on Dec. 2, 2013, closed at $40.78, above the IPO price of $26 a share.
Compare that to the end of Facebook's quiet period, when the three lead underwriters offered buy ratings.
As of June 29, 2012, Facebook had:
- 16 buy ratings
- 2 overweight ratings
- 18 hold ratings
- 1 underweight rating
- 2 sell ratings
Source: FactSet
That means out of 39 analysts polled by FactSet:
- 46 percent had a buy rating on Facebook
- 46 percent had a hold rating
- 8 percent had a sell rating
Bulls said: Facebook is "uniquely positioned to leverage its large and highly-engaged user base to monetize the mobile Internet." — Morgan Stanley.
Bears said: "We would become more positive with the launch of rich media or online video ads, but these have not yet materialized, likely in the name of not disrupting the user experience." — BMO Capital Markets.
Shares closed on June 27, 2012, at $32.23 a share, below the IPO price of $38.
— CNBC's Berkeley Lovelace Jr. and Michelle Castillo contributed to this report.
Disclosure: CNBC parent NBCUniversal is an investor in Snap.