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On Wednesday, Morgan Stanley (NYSE:MS) reiterated its Equalweight rating on Snap Inc (NYSE:SNAP) shares, maintaining a price target of $10.00. Currently trading at $11.60 with a market capitalization of $19.5 billion, Snap appears slightly overvalued according to InvestingPro analysis. The firm’s analysts acknowledged that Snap’s fourth quarter results and first quarter guidance were better than expected, with revenues slightly surpassing their projections. Despite the positive outcome, the analysts expressed a need for more consistent performance before concluding that Snap could achieve structurally faster growth.
Snap’s advertising business demonstrated year-over-year growth of approximately 9% in both the fourth quarter and the projected first quarter, which, although at the high end of estimates, still trails behind its peers, including Meta Platforms Inc (NASDAQ:META), Pinterest Inc (NYSE:PINS), Reddit, AppLovin (NASDAQ:APP) Corp, The Trade Desk Inc (NASDAQ:TTD), and Kingsoft Cloud Holdings Ltd. While the company’s overall revenue growth reached 13.66% in the last twelve months, InvestingPro data shows a concerning financial health score of 1.97 (labeled as ’FAIR’). The analysts noted that Snap’s growth has been inconsistent over the past years, and the market, along with Morgan Stanley, requires more consistent improvement in advertising performance and potentially user engagement growth to fully endorse the company.
The analysts highlighted Snap’s full pipeline of opportunities, including new advertising formats like Sponsored Snaps and Promoted Places, automated campaign optimization, budgeting tools, and enhanced machine-learning capabilities. They also pointed to Snap’s investments in GPU-enabled advancements that could drive more durable growth and performance, as detailed in the report "2025 Outlook: Who Will Be the GenAI Leaders and Laggards?"
Despite these potential innovations, Morgan Stanley has chosen to remain on the sidelines due to the need for consistent performance improvements. The firm’s price target of $10.00 for Snap’s shares remains unchanged, reflecting a cautious stance on the company’s prospects. For deeper insights into Snap’s financial health and growth potential, InvestingPro subscribers can access exclusive ProTips and a comprehensive Pro Research Report, which provides detailed analysis of the company’s performance metrics and future outlook.
In other recent news, Snap Inc. has been the subject of multiple analyst ratings. Wolfe Research maintained a Peer Perform rating on Snap, citing concerns such as decelerating growth, macroeconomic volatility, and subdued user engagement trends. The firm’s fair value range for Snap’s stock is between $9 and $20, based on a forward-looking EV/EBITDA multiple for fiscal year 2026 estimates.
Stifel maintained a Hold rating on Snap with a steady price target of $11.00, following the company’s fourth-quarter earnings which showed revenues slightly above expectations and a margin beat. Bernstein maintained a Market Perform rating on Snap with a steady price target of $12.00, highlighting the uncertain environment surrounding the social media sector due to the potential ban of TikTok in the United States.
BMO Capital Markets reaffirmed an Outperform rating with a steady price target of $16.00, highlighting Snap’s dedication to content creators and advancements in artificial intelligence and machine learning as key drivers for potential revenue growth. Lastly, JMP Securities maintained a Market Outperform rating with a $16.00 price target, following Snap’s release of its fourth-quarter 2024 earnings which surpassed expectations. These are the recent developments around Snap Inc.
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