Snap Shares Continue to Surge, Jump 7 Percent

New study showing the app’s massive popularity with teens gave its stock a jolt

Snapchat parent company Snap Inc. continued its mild renaissance on Tuesday, with shares of the disappearing messaging app darting up 7 percent to $14.53 a share at the closing bell.

It was Snap’s best close in a month, and the gloom and doom following its lackluster second quarter report has apparently subsided on Wall Street. Just 10 days ago, investors were sweating Snap’s slowing user growth, underwhelming sales and its stock lockup period ending. Also, no one was buying Spectacles, the sunglasses that record wide-angle point-of-view videos, which were released Nov. 2016. Snap shares headed for the floor, cratering 14 percent to a new all-time low the day after its earnings.

But a new study from eMarketer spurred investors to take another look at Snap on Tuesday.

The study found Snapchat to be more popular than Instagram — its chief competitor — and Facebook with young Americans aged 12-24. Snap is growing at a rapid double-digit rate each year among young adults, while Facebook is actually seeing its marketshare decrease by 3 percent. “Facebook nevers,” or kids that spurn joining the world’s largest social network, are starting to eat into its young demographic. Altogether, eMarketer projects Snap to have more than 40 million users between 12-24 by the end of the year, compared with “only” about 27 million for Instagram.

“Both [Snapchat and Instagram] have found success with this demographic since they are more aligned with how they communicate — using visual content,” eMarketer analyst Oscar Orozco said in a statement. “Outside of those who have already left, teens and tweens remaining on Facebook seem to be less engaged — logging in less frequently and spending less time on the platform.”

Snap is still trading well below its much-hyped $17 initial public offering. But with Wall Street looking at a sticky — and growing — young core as a sign of future gains, Snap’s early sins as a public company could soon be absolved.

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