Snap jumps after Goldman upgrades it to 'buy' on better-than-expected user growth (SNAP)

Snapchat employee

Shares of Snap Inc., the creator of popular social media platform Snapchat, rose as much as 3.8% pre-market on Friday after Goldman Sachs upgraded the company from a "neutral" to a "buy" rating.
The Wall Street firm cited higher-than-anticipated user growth from the launch of Snap Games and widely popular gender swap lenses as being among the reasons for the upgrade.
Snap's stock has blown past the broader market this year, rising as much as 183%.
Watch Snap trade live.
Visit the Markets Insider homepage for more stories.

Snap's winning streak in the markets could continue for the rest of the year, according to a new research report.

Goldman Sachs upgraded the social media company from a "neutral" to a "buy" rating on Friday lifting shares by as much as 3.8%. Snap's 12-month price target was also raised to $18 from $13.

The bank said Snap's upgrade was based on user growth surpassing expectations because of the company's updated Android app, the release of Snap Games, and the success of new Snapchat lenses.

Downloads of Snapchat hit a record 41 million in May thanks to the new updates, Goldman said. The previous record was set in mid-2016 with 30 million downloads.

Markets Insider is looking for a panel of millennial investors. If you're active in the markets, CLICK HERE to sign up.

One of Snap's persistent troubles has been finding ways to effectively monetize its platform. But according to Goldman's analyst, that could be changing.

"Our checks with advertisers also lead us to believe that the company's continued innovation in its ad-stack, particularly in self-serve, should allow SNAP to substantially improve monetization of user time spent on the platform over time," the firm said in a research note to clients on Friday.

App reviews of Snap have also increased over the last year, according to Goldman's note. Between May and June, more than half of Snapchat's reviews on the iOS App Store were three stars or above.

Goldman's analysts also expect Snap's revenue to grow by 4% in 2019 and 11% in 2020.

Snap's stock is up as much as 183% since the beginning of the year.

Now read more markets coverage from Markets Insider and Business Insider:

Wall Street is expecting the worst this earnings season. But Bank of America says traders will be pleasantly surprised.

Roku has skyrocketed 240% this year. We spoke to 3 experts about why, and what investors should be looking for in the future.

Leaked memo shows how Deutsche Bank spared its research department, even as the industry braces for a brutal future