Updated from 10:59 a.m. with additional information.
Snap (SNAP) landed its first Buy rating on Monday, halting a losing streak among Wall Street firms which so far have charted a gloomy future for the young social media company.
Shares of Snap were gaining 2.3% to $19.99 on Monday afternoon after hovering around $19.50 a share late last week.
James Cakmak of investment firm Monness, Crespi, Hardt initiated coverage of Snap with a Buy rating and a $25 price target, saying that while the parent company has "more model risks than any initiation" they've had to date, Snap could still have a promising future ahead of it.
So far, Snap has six Sell ratings and three Hold ratings from Wall Street analysts.
"We recognize we are potentially giving too much credit for unproven skills in building a business, rather than just a product, but we see more to Snap than many suggest," Cakmak wrote. "There is substantial execution risk, but we're prepared to give the benefit of the doubt at this stage knowing what we know about Snap and knowing what we know about the efforts of its competitors."
Cakmak notes that it's "very easy" to lay out the bear case for investing in Snap: The company's path to profitability remains uncertain, it has a premium $20 billion-plus valuation and the launch of Facebook's (FB) Instagram Stories has only exacerbated concerns around the fact that it faces "deep-pocketed competition."
Snap's complicated and restrictive non-voting share structure is also a cause for concern, Cakmak said, and could potentially lead to it being excluded from the S&P Dow Jones Indices and MSCI Inc. If Snap isn't included on a major index like the S&P 500, it could put further pressure on the stock.