Why Snap Stock Jumped Today

By Evan Niu, CFAMarketsFool.com

What happened

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Shares of Snapchat operator Snap (NYSE: SNAP) have jumped today, up by 6% as of 12 p.m. EDT, after the company introduced a set of ad-buying tools.

So what

Snap has just unveiled a self-serve platform, dubbed Snapchat Ad Manager, for advertisers to purchase ads on its mobile platform. Previously, prospective advertising customers had to work with a Snap account manager and commit to high levels of ad spending, often hundreds of thousands of dollars.

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Image source: Snap.

Larger advertisers prefer a more hands-on approach, and find more value in being able to use custom targeting and other more advanced features. Rival social media networks offer similarly automated self-serve ad platforms.

Now what

The self-serve platform will help automate much of the ad-buying process while significantly lowering the cost of admission, opening up the platform to a larger group of smaller advertisers. The new platform is currently a private beta but will become broadly available in June. Advertising customers will be able to purchase and manage ad inventory, while also viewing analytics and performance metrics around those ads. The platform will support all of Snap's various ad formats, including sponsored geofilters, among others. Snapchat Ad Manager is an important step as Snap continues to build its nascent advertising business, and it has the potential to significantly broaden the company's advertiser base by catering to smaller businesses.

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Evan Niu, CFA has the following options: long January 2019 $20 puts on Snap Inc. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.