Analyst James Cakmak Favors Snap Inc (SNAP) vs Facebook (FB)

Snap Inc (NYSE:SNAP) has had a less than glorious run since its much ballyhooed IPO earlier this year, which saw its shares rise to nearly $29 by the end of their second day of trading on March 3. Since then however, they’ve declined by 24%, with the latest blow to the stock being Facebook Inc (NASDAQ:FB)‘s announcement that it will add ‘Stories’ functionality to its service, co-opting another of Snapchat’s popular features. Speaking to CNBC today, Monness, Crespi, Hardt & Co., Inc. analyst James Cakmak believes that if nothing else, that may prove that Snapchat has a better read on what its audience wants.

Nor is Cakmak alone in that line of thinking. Drexel Hamilton analyst Brian White also expressed similar sentiment in a recent note to investors, saying that Snap’s dip represented a buying opportunity and that it showed that Snap has the kind of creative vision and cachet with millennials that will be difficult for Facebook or any other company to accurately mimic. The analyst has a ‘Buy’ rating and $30 price target on Snap Inc (NYSE:SNAP)’s shares.

It’s not the first time that Facebook Inc (NASDAQ:FB) has pilfered features from Snap Inc (NYSE:SNAP), as Stories had already been rolled out on Facebook’s Instagram and WhatsApp. Facebook has clearly been monitoring the company closely and likes what it does, as evidenced by its attempted $3 billion purchase of Snap in 2013, which was rebuffed. Snap for its part is aware that its young consumer base may not be extremely loyal in the event that it doesn’t stay on the cutting edge and stay one step ahead of companies like Facebook who would try to mimic it, stating in its IPO filing that “This demographic may be less brand loyal and more likely to follow trends than other demographics.”

However, James Cakmak believes the company is on the right track to building a brand that will not only stand the test of time but will be able to capitalize on the growing amount of time that people are spending on mobile apps.

“I think what people are really missing on Snap Inc (NYSE:SNAP) is the fact that look at it, time spent on digital is now 50% of time spent, but TV dollars, offline dollars, are still very much over-indexed relative to time (spent); why is that? Even though all this time is shifting. The reason is because the marketing products, the app products that you see today, are not aligned with the marketing goals, because everything is about clicks and conversions, nothing is about brands building affinity, building awareness, and I think Snap understands that and by moving more toward a type of fully immersive mobile video experience, I think that they can crack that nugget,” Cakmak said on CNBC.