Augmented reality (AR) would help to boost the monetization of the Snapchat social network, operated by Snap Inc. (SNAP), Deutsche Bank analysts claim.
The addressable market for some AR features is immense, and Snapchat is well positioned to take advantage of this with its multi-million active audience. Deutsche Bank analysts are growing the target price for SNAP shares to $48 on the basis of this thesis while maintaining a “buy” rating. Snapchat will soon launch more AR services related to purchases, according to analysts. Virtual fitting of shoes or clothing may be part of these programs. This presents good opportunities for advertising revenue generation. A Deutsche Bank analyst estimates that in the next few years, the overall demand for such offers could reach $4 billion.
Revenue per Snapchat user was $2.73 in the last reporting period, a record high. The principal growth, however, was in the North American industry. This is why in other countries; the social network firm operates to improve monetization. AR facilities can be part of this solution. The benefit of the business is that its audience is rising and becoming more solvent.
The audience at Snapchat is loyal to applications for augmented reality. On average, users use AR functions about 30 times a day according to the management of the social network. The Snapchat audience currently stands at nearly 250 million, a rise of 11 million in the last quarter alone.
In the third quarter, the results of which were released by Snapchat a few weeks ago, revenue grew by 52 percent and surpassed $670 million. At the same time, while Wall Street expected a loss, the company was able to make a little profit on adjustment basis.
Snap Inc. (SNAP) closed the Tuesday trading at a gain of 0.49 percent to $39.27, however that rises to an impressive 140 percent from start of the year.