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On Wednesday, Goldman Sachs analyst Eric Sheridan updated Snap Inc ’s (NYSE:SNAP) financial outlook, reducing the price target to $8.50 from the previous $9.50, while maintaining a Neutral rating on the company’s shares. Currently trading at $9.09, Snap has shown remarkable momentum with a 13.91% gain over the past week. According to InvestingPro analysis, the stock appears slightly undervalued based on its Fair Value model. Sheridan provided an overview of Snap’s first quarter earnings for 2025, noting several key points from the report.
The analyst observed that Snap’s Q1 revenue was broadly in line with expectations, with the company achieving 14.91% year-over-year growth and maintaining a healthy gross profit margin of 54.1%. While the company has stopped providing forward revenue guidance due to volatile advertising industry behavior observed in April, InvestingPro data shows strong financial health with a current ratio of 4.3, indicating robust liquidity. Despite this, Snap’s adjusted EBITDA exceeded expectations, supported by the company’s efforts to diversify revenue, increase auction density, and move past significant advertising technology investments.
Snap’s management team continues to focus on balancing user interface changes within the app to boost adoption rates and utility. Additionally, the company is concentrating on medium to long-term product and platform initiatives. Sheridan highlighted Snap’s efforts to scale its direct response business, including growth among small and medium-sized business advertisers, and identified potential revenue growth opportunities. These opportunities include the Snapchat+ subscription revenue stream, app redesign, new advertising products, and possible changes to the competitive landscape in the U.S. market.
Looking ahead, Sheridan expects that investor attention will likely remain on macroeconomic uncertainty, visibility on broader advertising trends, and the company’s ability to control margin trajectory in the current economic climate. Analysts tracked by InvestingPro forecast the company to become profitable this year, with projected earnings per share of $0.33 for 2025. With these factors in mind, Goldman Sachs has adjusted its price target while reiterating a Neutral stance on Snap stock. For deeper insights into Snap’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which covers over 1,400 US stocks with detailed analysis and actionable intelligence.
In other recent news, Snap Inc. reported its first-quarter 2025 earnings, revealing a narrower-than-expected loss with an EPS of -0.08, compared to a forecast of -0.13. The company also reported revenue of $1.36 billion, surpassing expectations of $1.35 billion, marking a 14% year-over-year increase. Despite these positive earnings results, Snap’s stock experienced a significant decline in after-hours trading. The company reached 900 million monthly active users, with daily active users growing by 38 million to 460 million. Advertising revenue rose by 9% year-over-year, contributing to the overall revenue growth. However, Snap refrained from providing formal Q2 financial guidance due to macroeconomic uncertainties. In related developments, Evercore ISI adjusted its price target for Snap shares, lowering it from $13 to $11, while maintaining an In Line rating. The firm noted Snap’s decision not to provide financial guidance for the second quarter as a factor in their cautious stance.
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