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Snap shares rise after prominent bearish analyst says the worst may be over

Key Points
  • The worst is over for Snap shareholders, according to MoffettNathanson
  • The firm raises its rating to neutral from sell for Snap shares, saying the social media company's user numbers may rise.
Timur Emek | Getty Images

The worst is over for Snap shareholders, according to one Wall Street firm.

MoffettNathanson raised its rating to neutral from sell for Snap shares, saying the social media company's app design reversal may help its user metrics.

"We worry that as Snap reverses that ill-conceived redesign, user growth will improve which could help the narrative," analyst Michael Nathanson said in a note to clients Monday. "We are upgrading Snap … primarily based on concerns that our sell call and bearish sentiment are reflected in consensus views and estimates."

Snap shares rose 1.2 percent Monday after the call.

Nathanson increased his price target for Snap shares to $9 from $7, representing 15 percent downside to Friday's close.

"In addition, several factors could potentially improve Snap's situation throughout the year, including the redesign of the app redesign, completion of the shift to a programmatic advertising model, launch of the new Android app and a leaner organizational structure," he said.

The company's stock is down 27.6 percent this year through Friday versus the S&P 500's 1.5 percent return.

Disclosure: CNBC parent NBCUniversal is an investor in Snap.