$4 is putting together the building blocks for a powerful location-based ad business, Oppenheimer analyst Jason Helfstein wrote in a note to clients on Monday.
The $4 allows any Snapchat user to see where their friends are on a map of the world. It also shows crowdsourced videos and photos, or snaps, that are shared from specific locations.
Oppenheimer's Helfstein believes that Snap Map represents an opportunity for Snapchat to let brands advertise to users based on the places they visit in the real world.
"In the long term, we see an online-to-offline
Snapchat parent Snap Inc. recently signaled its growing interest in location-based advertising with its $4, which helps advertisers track real-world purchases and store visits. Location-targeted ad spend on mobile is expected to reach $32 billion annually in the US by 2021, according to $4
Combined with Snapchat's youthful user base and its early push with brand advertising, Oppenheimer sees Snap Maps as a way to eventually surface location-based ads alongside user-submitted snaps.
"Who spends the most time hanging out in shopping malls, going to the movies, dining at fast-food chains and buying branded apparel?" wrote Helfstein. "Snap is gradually building content discovery that should appeal to advertisers looking to target young people at specific times and locations."
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Oppenheimer
Whether Snap's product changes can convince investors of its value remains to be seen, however. Shares of Snap were $4after Credit Suisse lowered its price target by $5.
Oppenheimer also noted on Monday that second-quarter revenue growth "is expected to be weak" when Snap reports quarterly results in the coming weeks.
Get the latest Snap stock price$4