Snap stock holds Outperform rating at Raymond James despite ad issues

Investing.com - Raymond (NSE:RYMD) James has reiterated its Outperform rating and $10.00 price target on Snap Inc (NYSE:SNAP), currently trading at $9.39, despite the company reporting revenue below Street expectations. According to InvestingPro analysis, SNAP is currently trading below its Fair Value, with analysts setting targets ranging from $7 to $15.

The social media company’s underperformance broke a pattern of strong advertising beats from major tech platforms including Google (NASDAQ:GOOGL), Meta (NASDAQ:META), and Amazon (NASDAQ:AMZN), according to Raymond James. The firm attributed Snap’s revenue miss to "unexpected ad platform execution issues" that caused bids to clear at artificially low prices. Despite these challenges, InvestingPro data shows SNAP maintains strong liquidity with a current ratio of 4.3, and revenue grew nearly 15% in the last twelve months.

Raymond James noted these technical issues have subsequently improved following a platform fix, though increased investments in artificial intelligence and machine learning infrastructure costs, combined with maintained operating expenses, are dragging down EBITDA estimates.

Despite these challenges, the firm highlighted several positive indicators for future monetization potential, including Sponsored Snaps driving conversion improvements, Spotlight time spent increasing 23% year-over-year, and Snap+ subscribers growing 42% year-over-year to reach 3.4% of daily active users.

Raymond James trimmed its estimates for Snap but maintained its Outperform rating, citing a case for acceleration next year based on direct response advertising recovery and expansion of Sponsored Snaps. InvestingPro subscribers can access additional insights through the comprehensive Pro Research Report, which includes detailed analysis of SNAP’s financial health, valuation metrics, and growth prospects among 1,400+ top US stocks.

In other recent news, Snap Inc. reported its second-quarter 2025 earnings, revealing a slight miss on earnings per share (EPS), which came in at -$0.16, just below the forecast of -$0.15. However, the company met revenue expectations with $1.35 billion. Goldman Sachs responded to these results by raising its price target for Snap from $8.50 to $9.00, while maintaining a Neutral rating. The investment bank noted that Snap experienced volatile month-to-month revenues in Q2, but management provided a "modestly more constructive picture" for Q3. In contrast, Citizens JMP downgraded Snap from Market Outperform to Market Perform due to slowing advertising revenue growth, which was just 4% year-over-year in Q2 2025. This suggests that Snap may be losing market share to other major advertising platforms. These developments highlight the mixed reactions from analysts regarding Snap’s recent performance and future prospects.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.