Shares of Snap Inc. climbed approximately 3.7% in premarket activity Tuesday, reaching $5.38, following an upgrade from Arete Research. The firm shifted its rating to Buy from Neutral, though it reduced its price target to $7.30 from $8.60.
Navigating a Difficult Year
The upgrade arrives as Snap's stock trades near the lower end of its 52-week range, having declined roughly 50% over the past year. This positioning means even modest shifts in market sentiment can lead to pronounced price movements. The stock closed Monday's session at $5.19.
Snap's recent quarterly report presented a mixed picture: the company surpassed fourth-quarter revenue expectations but issued a first-quarter revenue forecast that fell short of analyst estimates. Management cited intense competition for digital ad spending from larger rivals like Meta Platforms and TikTok. "Snap's advertising platform continues to face challenges in securing major budgets from large enterprise clients," noted Emarketer analyst Max Willens.
Strategic Moves and Cautious Outlook
In conjunction with its earnings, Snap announced a new stock buyback program authorizing up to $500 million in repurchases over the next 12 months. CEO Evan Spiegel stated the quarterly results demonstrated a focus on "profitable growth." The company also recently filed its annual audited financial statements for 2025.
Despite the upgrade, broader analyst sentiment remains guarded. The consensus rating among tracked analysts is Hold, with an average price target still significantly above the current trading level. This gap underscores the potential upside if advertising demand recovers, contrasted with the risk of further target reductions if conditions worsen.
Not all analysts are convinced. Roth Capital Markets reiterated a Neutral rating, lowering its target to $7 from $10, and described Snap's near-term outlook as "uninspiring," highlighting concerns over partnership execution and soft trends among key North American advertisers.
Investor attention now turns to upcoming U.S. economic data, including the January employment and consumer price index reports, which could influence interest rate expectations and impact ad-dependent growth stocks like Snap.
