One of Snap's biggest bears admits he was wrong, but still thinks shares will plunge by 30% (SNAP)

• Snap bear and Morgan Stanley analyst Brian Nowack has grown more positive on the company, but still thinks shares have 30% downside.
• He raised his price target to $8.50 a share after the stock has gained 115% this year.
• Nowack was one of the biggest Snap bears on Wall Street, previously having a price target of $5.50.
• Watch Snap trade live.

Snap shares have run up more than 100% this year, causing one of the company's biggest bears on Wall Street to change his view on the stock.  

"Snap is executing at a higher level but we believe its ~120% multiple expansion YTD captures these improvements," wrote Morgan Stanley analyst Brian Nowack. He added that the bank's discounted cash flow-based price target "still has 30% downside," while raising his price target from $5.50 to $8.50 a share. Ahead of the change, just two Wall Street analysts were more bearish on the company's prospects, both with price targets of $5. 

"We remain underweight until we find further evidence of faster-growing users (watching app downloads and third party data) and/or further improving advertising trends," he said. 

Nowack raised his financial projections and noted Snap has experienced tangible improvements to its bIn addition, the company has continued to innovate with a new focus on expanding its platform to gaming.

Nowack said the key risks to his thesis include better-than-expected user growth from the recent re-launch of the Android Snap app, and better-than-expected monetization of the company's core Stories platform.

The rebound in Snap's share price comes after a period of intense volatility for the company. At one point in Decmeber, its stock price was down more than 70% from its initial-public-offering price of $17 a share. Since its IPO, more than 20 senior executives have left the company. 

And Snap's problems don't stop there. A report out this week from The Financial Times calculated the social-media network will run out of cash within three years if revenues don't pick up.

Snap shares were up 115% year-to-date.

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