Snap stock price target cut to $8 by Susquehanna

On Wednesday, Susquehanna analysts lowered the price target on Snap Inc (NYSE:SNAP) to $8.00 from the previous $13.00, while maintaining a Neutral rating on the company’s shares. Currently trading at $9.09, Snap has shown remarkable momentum with a 13.91% return over the past week, according to InvestingPro data. The firm’s analysts pointed out that Snap delivered a strong first quarter but did not provide guidance for the second quarter due to current macroeconomic uncertainties.

Snap’s first-quarter revenue reached $1.4 billion, marking a 14% year-over-year increase, maintaining its strong revenue growth trajectory of 26% CAGR over the past five years. This figure slightly exceeded both Susquehanna’s estimates and the consensus. The company’s direct response (DR) advertising business grew by 14% year-over-year, while its brand advertising segment saw a 3% decline, a dip from the 1% year-over-year decline in the previous quarter. With a market capitalization of $15.42 billion and a healthy current ratio of 4.3, InvestingPro analysis indicates the company maintains strong liquidity despite current challenges. Snap attributed this to a decrease in upper funnel ad demand and a shift towards performance advertising, noting that DR advertising constituted over 75% of its total advertising revenue for the first time in the first quarter.

The platform’s premium service, Snapchat+, saw its subscriber count nearly reach 15 million in the first quarter, a significant 59% increase compared to the previous year. Average revenue per user (ARPU) also rose by 5% year-over-year, which was slightly above both Susquehanna’s expectations and the consensus. Furthermore, the company’s EBITDA for the quarter was notably higher than estimates, consensus, and guidance, driven by unexpected revenue growth and effective cost management.

In terms of user metrics, overall daily active users (DAUs) were satisfactory, with a total of 460 million, which was approximately 1 million more than estimated by Susquehanna, the consensus, and the midpoint of the guide. DAUs in North America saw a 1% sequential decline, slightly below consensus expectations, while Europe’s DAUs remained stable, aligning with consensus. DAUs from the rest of the world exceeded consensus by around 2 million. For the upcoming second quarter, Snap expects DAUs to reach 468 million, which is about 2 million above Susquehanna’s estimate and around 1 million above the consensus.

Snap also adjusted its plans for Simple Snapchat after finding that its most engaged users preferred the current layout over a simpler version. The company is now testing a new interface that incorporates preferred elements from both layouts. Looking ahead, analysts tracked by InvestingPro project positive earnings of $0.33 per share for 2025, suggesting a potential turnaround in profitability. InvestingPro subscribers have access to over 20 additional key metrics and analysis tools to better understand Snap’s financial health and growth potential.

In other recent news, Snap Inc. reported first-quarter earnings for 2025, highlighting a challenging environment with no revenue guidance provided for the second quarter due to macroeconomic uncertainties. Despite these challenges, Snap’s revenue and EBITDA slightly exceeded market expectations, with revenue growing year-over-year. Notably, Goldman Sachs observed that Snap’s adjusted EBITDA surpassed expectations, supported by efforts to diversify revenue and increase auction density. Analysts from BMO Capital Markets, Barclays (LON:BARC), BofA Securities, Goldman Sachs, and Evercore ISI have all revised their price targets for Snap, citing various concerns and opportunities. BMO Capital Markets and Barclays have maintained positive ratings, with BMO emphasizing a 60% increase in active advertisers and Barclays highlighting Snap’s stronger position compared to 2022. Meanwhile, BofA Securities and Goldman Sachs have maintained neutral ratings, pointing to concerns about user engagement and macroeconomic uncertainties. Evercore ISI also reduced its price target, noting Snap’s decision to cut 2025 adjusted operating expenses by $50 million. These developments reflect a cautious outlook among analysts, as they weigh Snap’s strategic initiatives against ongoing economic challenges.

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