Snap and Pinterest Stocks on Pace for Highest Closes Since 2022 After Upgrades

The analyst wrote in a research note that Snap is his “more controversial call.” The stock has risen 58% this year, but that hasn’t been without struggles. In October, the parent of
Snapchat
reported third-quarter financial results that beat expectations but declined to give official fourth-quarter guidance, citing “the unpredictable nature of war” amid the conflict in the Middle East.

Snap has also experienced advertising challenges as inflation and interest rates climbed. Heaney cites an expected improvement in the company’s advertising revenue as one reason for his upgrade, though.

Specifically, he cited direct-response advertising, or DR, which are ads that encourage users to take immediate action, such as buying a product on the spot. “Recent improvements to the DR platform (70-75% of rev) should continue driving better advertiser performance and faster budget growth going forward,” Heaney said.

Shares of Snap were climbing 8.4% to $14.07 on Thursday, and were on pace for their highest close since July 2022, according to Dow Jones Market Data. The stock has gained 41% this month and was on pace to have its best month since October 2020.

Pinterest shares were also rising after the analyst’s upgrade. The stock was up 3.7% to $34.49 and was on pace for its highest close since January 2022.

Shares of Pinterest have surged 43% this year, with the stock recently climbing after the photo sharing platform reported third-quarter financials in October that beat Wall Street expectations. Pinterest also reported a 26% increase in ad impressions, or views of posts, from the prior year.

“Our PINS upgrade following our recent initiation of coverage is based on several factors, including material EBITDA upside to the street over the next few years, increased confidence in ad pricing tailwinds, and more durable than expected user growth and engagement gains,” Heaney said.

Write to Angela Palumbo at [email protected]