Shares of Snap (SNAP) - Get Report  gained, then slipped Tuesday as analysts at Evercore ISI boosted their outlook on the social media company's stock, citing the revenue potential of its new gaming platform.

The stock rose as much as 3.6% to $16.40 following Evercore ISI's upgrade of Snapchat's parent to outperform from in line. Snap recently was trading off 1.6% to $15.59. 

The launch of Snap Games and its potential to generate significant advertising revenue drove the upgrade, Evercore ISI analyst Kevin Rippey wrote.

Users who download the app can chat and play with friends and others, with Snap's marketing campaign billing the new gaming platform as "mobile games, made for friends."

Evercore ISI also boosted its price target on Snap to $20 from $18.

"Gaming provides SNAP a credible vector of incremental growth, naturally fitting with the platform's differentiated appeal to younger cohorts looking for innovative digital experiences to extend real-world relationships," Rippey noted.

While Snap is still exploring ways to monetize Snap Games, the report notes, there are already "well-established mobile game monetization comps."

By 2022, as much as 18% of Snap users will be playing games on the social media company's new platform.

This would generate $350 million in new revenue at "attractive EBITDA margins" and adds up to an 8% increase over its previous 2022 revenue estimates, ISI Evercore said.

"Multiplayer gaming is a natural extension of Snap's core point of differentiation: outsized engagement among young audiences, which should support better adoption on a relative basis than social peers," Rippey wrote.