Snap could be trading at twice its true market value – if not more – according to GAM's investment director who has valued the stock at $13 per share, less than half the price achieved when the company went public last month.
Valuations of the company behind the ephemeral message app could range anywhere from $2 to $40 per share, but average out at $13 based on independent estimates, Mark Hawtin told CNBC Tuesday.
Snap is currently trading at $22.35 per share having experienced a mixed ride since it listed on the New York Stock Exchange in early March. The company closed at $24.48 a share on its first day of trading but soon after reached highs of $27.09. It later fell to lows of $19.54 but has remained well ahead of Hawtin's analysis.
"When we look at all the scenarios for Snap we get between a $2 and a $40 price target. That's the widest range I've got for any company we look at, and that shows the uncertainty with that particular name," Hawtin noted.
"When we probability-weight it we get a target of around about $13," he continued, referring to GAM's analysis, which is conducted independently to Snap's and considers various scenarios and potential growth opportunities.
"It's about 50 percent too high."
Snap is yet to release its earnings since listing, however, it priced its initial public offering of 200,000,000 shares of Class A common stock at $17 per share.
Despite having a higher risk profile, Goldman Sachs, one of the investment banks behind the company's listing, projected that Snap could achieve a share price target of $27.
"With Snap's large, valuable, and highly engaged user base generating ad inventory and the monetization path in mobile now well worn, we believe the potential for outperformance as the company continues to innovate against the growing mobile opportunity outweighs those early stage risk," Goldman Analyst Heath Terry said in a note to investors last week.
Global financial services firm BTIG announced Tuesday that it initiated a neutral rating for Snap. Several of Snap's underwriters have a 'buy' rating on the stock.
Disclosure: When requested by CNBC, GAM said it was unable to disclose any holdings in Snap due to the proximity of the IPO.
CNBC parent NBCUniversal is an investor in Snap.
