Source: CNBC

We all know that Snap Inc. recently held an IPO. However, since then, most Wall Street analysts are advising to hold or stay away from the stock. But now, things could be turning around.

Last Monday, the first "buy" rating on Snap's stock materialized. One of the first equity-research firms to give Snap such rating is the Monness. James Cakmak, an analyst of this firm, commented that there are a couple of reasons why Snap's stocks may be ripe for buying.

Before we cover the reasons as to why Snap's stocks may be a good buy, we think that it's best that we first cover the biggest roadblock. Wall Street analysts are having serious doubts about Snap's management. Building a successful business is not always about the product as most people would think. It also takes skills to grow and manage a business, and Snap Inc. has yet to prove their worth in this arena.

Despite this big risk factor, some analysts are giving Snap a "buy" rating because of how it relates to the industry and its competitors.

As of the moment, Snap is branding itself as a camera company. At this rate, there is a potential that it would replace the native camera app in mobile devices. If that happens, then Snap's profits would experience a big rise.

Another reason why Snap is getting a "buy" rating is the company is enticing when you factor its competitors. According to Cakmak, the profit margins of Snap's competitors have peaked already. Yet, Snap's revenue potential is likely to be seven times more than its competition.

Another Snap ace card is its licensing agreements. With it, the company is in a better position when it comes to meeting the needs of publishers when compared to its competitors. For example, Snap developed Bitmoji, which allows great customizability for emoji users. As of the moment, such feature is still underappreciated. If the market catches on, then it would skyrocket Snap's users, along with its revenue.

Recently, Snap's stock has been on a rollercoaster. A week before Snap's IPO, share prices plunged by as much as 11%, bringing the price down to around $17. It's speculated that a lot of the traders are loading up their bets against Snap's stocks. In fact, the short selling interest of the stock has surged up to 30 million shares, which is around 15.4% of all the tradable shares in the market. Last Monday, Snap stocks gained 2% during the pre-trading market, which brought the price to around $20. According to Cakmak, he has a price target of around $25 for Snap's stocks.

Source: Reutersmedia

According to Bloomberg, no one gave Snap's stock a "buy" rating before Monday. In fact, the stock held six "sells" and five "hold" ratings.

While Snap Inc. does have its risks, its profit margins are far from its peak, and that's why some are giving it a "buy" rating. We could be seeing the start to the rise of Snap's stocks.