Snap's Pain Is Augmented Reality's Gain, According To Gene Munster

Investors weren’t pleased by Snap Inc (NYSE: SNAP)’s 1.2-percent daily active users miss posted in its Wednesday earnings release. But Loup Ventures’ Gene Munster sees a silver lining.

“That’s bad news for Snap, but good news for the field of Augmented Reality [AR],” Munster wrote in a Thursday note.

Snap And Facebook Moving Forward In AR

In fact, Snap’s stumble can only inspire a second wind in the race to dominate the AR space.

At Facebook Inc (NASDAQ: FB)’s recent F8 conference, CEO Mark Zuckerberg reiterated his commitment to AR for the future of both Facebook and Instagram. So far, the company’s platforms have proven formidable competitors for Snap, with Instagram Stories quickly surpassing Snapchat in DAUs after launching in August.

As its rival continues to accelerate, Snap is scrambling to innovate to make up conceded ground. New camera features will be critical in seizing market control.

“Facebook has taken an open approach to its camera, giving developers a set of tools with which they can create apps that run on Facebook’s camera platform,” Munster wrote. “By opening this up, Facebook will see more and better AR content within its application. Snapchat will likely follow suit and open up its camera for other developers, as well.”

Moving Markets

The analyst ultimately sees rising competition between Snapchat and Facebook forwarding the AR push.

Although Snap’s shares plummeted 23.2 percent on its earnings miss, a number of analysts shared Munster’s optimism. The company earned a few upgrades and maintains a few Buy ratings in the days following.

At time of publication, the stock was trading around $18.64, up 3.27 percent on the day but still down 21 percent from its pre-earnings value.

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