Shares of Snapchat parent Snap Inc. surged 3.0% in premarket trade Thursday, bouncing of the previous session's lowest ever close, after the social media company was upgraded at Stifel Nicolaus, which said the recent sharp selloff has created a "compelling" risk-versus-reward opportunity. Analyst Scott Devitt raised his rating to buy from hold, and set a new price target of $22, which is 29% above Snap's initial public offering price of $17 and 44% above Wednesday's closing price of $15.24. Devitt said he believes investors may be overreacting the first-quarter revenue miss, concerns over the lock up expiration this month and worries that competition is increasing. "Contrary to current sentiment, we do not believe the wheels are falling off Snap's user growth story," Devitt wrote in a note to clients. He said that while competition from Facebook Inc.'s is a chief concern for investors, "recent app download trends appear healthy in key ad markets, leading us to believe near-term risks to revenue-generating [daily active users] may be overstated." Stifel Financial was among the underwriters listed in Snap's IPO filing, but was not one of the leads. On Tuesday, a lead underwriter, Morgan Stanley, downgraded Snap on reports ad products were not improving. The stock has plunged 38% since its first-day of trade on March 2, while the S&P 500 has gained 2.6%.
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