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Snap Inc. (NYSE: SNAP) is recognized as one of the fastest-growing social media platforms, especially with particular strength among the preteen through mid-20s demographic. But is this enough to put up a fight against the likes of Facebook or Twitter? One independent research firm thinks that Snap has the potential to do so, but it may take some time.

Argus initiated coverage for Snap with a near-term Hold rating and a long-term Buy rating. Currently, the Snap shares appear expensive and priced for flawless execution. However, the company’s core Snapchat service faces competitive challenges from Facebook and others. In particular, street revenue assumptions assume extremely robust growth in advertising dollars, at a time when competitor offerings are having an impact on user growth.

Snapchat has shown significant growth in average revenue per user and daily active user during the company’s short history. Snap has signed a deal with NBC Universal for the 2018 Winter Olympics that will allow NBC to sell games-related filters and lenses (popular Snapchat features). The deal could bring Snap $75 million in advertising revenue. This kind of partnering with mainstream media venues is highly positive for Snap.

Although growth has been strong, competition has begun to heat up with the introduction of Stories by Facebook, following the launch of Stories-like platforms on Facebook properties Instagram and WhatsApp. Snapchat’s daily active user growth has slowed, potentially reflecting competitive inroads. Facebook has far more users, and it is possible that many active users of Snapchat could shift to Instagram and the core Facebook platform. Five-fold growth in 2016 revenue will be difficult to repeat going forward, although growth should remain well above average.

The opportunity for social media companies such as Snap to disrupt the advertising market while displacing traditional mediums is vast. According to IDC, the global advertising market is expected to grow from $652 billion in 2016 to $767 billion in 2020. IDC also predicts that mobile advertising spend will grow from $66 billion in 2016 to $196 billion in 2020.

According to the Argus report:

Like Twitter, Snapchat is a mobile-first platform; rival Facebook was born on the PC and struggled to migrate to mobile devices. Given the ubiquity of mobile devices among its generally youthful users, Snapchat is positioned to grow.

But Snap likely needs to broaden its core user base beyond the millennials and capture the Gen X demographic and at least a portion of the Baby Boomer crowd. Facebook has been very successful in older demographics. Affinity groups from volunteer fire companies to book groups use the Facebook service as a virtual clubhouse. We are not sure if there is as clear a hook to lure affinity groups onto Snapchat.

Snap refers to itself as a “camera company,” not a social media company. This has led some investors to believe Snap will prioritize new hardware products such as Spectacles. The marketing strategy of Spectacles has been successful since their launch and has created a significant amount of buzz and excitement around the product. Further innovation and diversification away from the flagship product may become more important if the company is unable post the same levels of growth in the face of competition with Facebook’s Instagram.

Shares of Snap were last seen down 1.3% at $22.23 on Monday, with a consensus analyst price target of $23.36 and a post-IPO trading range of $18.90 to $29.44.