Snap stock price target lowered to $9 at UBS on ad growth concerns

Investing.com - UBS has lowered its price target on Snap Inc (NYSE:SNAP) to $9.00 from $10.00 while maintaining a Neutral rating, citing concerns about advertising revenue growth. Currently trading at $9.39, Snap commands a market capitalization of $15.8 billion, with analyst targets ranging from $7 to $15. According to InvestingPro data, the stock shows a Fair overall financial health score.

The firm estimates Snap’s third-quarter 2025 advertising revenue growth will be approximately 3-6%, assuming near-linear quarter-over-quarter growth for Snapchat+ and other revenue streams. UBS believes Snap’s second-quarter 2025 exiting growth rate was likely 7-8%, down from the 9% management disclosed for the first quarter of 2025. The company has demonstrated revenue growth of 14.9% over the last twelve months, with a strong current ratio of 4.3x indicating solid liquidity.

UBS attributes the expected deceleration to Snap’s broader rollout of Sponsored Snaps, which has added more supply to the ad auction and effectively offered advertisers an implicit discount on campaigns. This change impacts the company’s third-quarter guidance.

The firm noted that Snap’s direct response ad revenue grew 5% in the second quarter, down from 14% in the first quarter of 2025, though it still outpaced aggregate revenue growth. Brand advertising remained flat during the same period.

While UBS has modestly increased its overall revenue estimates for Snap in 2026 and 2027 due to better-than-expected performance from Snapchat+ and other revenue sources, the firm’s advertising revenue forecast has been reduced as it recalibrates impression and effective cost-per-thousand impressions (eCPM) projections. InvestingPro analysis indicates that while Snap isn’t currently profitable, analysts expect positive earnings this year. Discover more insights and 6 additional key ProTips with an InvestingPro subscription, including detailed valuation analysis and comprehensive Pro Research Reports available for over 1,400 US stocks.

In other recent news, Snap Inc. reported its second-quarter 2025 earnings, revealing a slight miss on earnings per share (EPS) with a result of -$0.16, compared to the forecasted -$0.15. However, the company met revenue expectations, reporting $1.35 billion. Despite the earnings miss, Evercore ISI raised its price target for Snap to $12.00 from $11.00, maintaining an "In Line" rating, citing a rollforward of its valuation framework. Meanwhile, Raymond (NSE:RYMD) James kept its Outperform rating and a $10.00 price target, noting Snap’s revenue fell short of expectations due to "unexpected ad platform execution issues." Goldman Sachs also adjusted its price target to $9.00 from $8.50, maintaining a Neutral rating, while acknowledging volatile revenues in the second quarter. On the other hand, Citizens JMP downgraded Snap from Market Outperform to Market Perform, highlighting the company’s 4% year-over-year advertising revenue growth as a sign of slowing ad growth. Management at Snap has provided a "modestly more constructive picture" for the third quarter, although they remain cautious about trends for the second half of the year. These developments underscore the challenges and varying perspectives on Snap’s financial 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.