On Wednesday, BMO Capital Markets adjusted its outlook on shares of Snap Inc (NYSE: NYSE:SNAP), reducing the price target from $18.00 to $16.00, while maintaining an Outperform rating on the shares. According to InvestingPro data, the stock currently trades at $11.34, with 14 analysts recently revising their earnings expectations upward.
The adjustment comes as BMO Capital acknowledges the growing advertiser adoption of Sponsored Snaps, driven by strong returns on ad spend (ROAS). This trend is seen as a positive indicator for the company's potential revenue growth in 2025.
The analysis by BMO Capital highlights a recent positive shift in casual U.S. user engagement with Snap as 2024 concluded. This uptick in user activity is expected to contribute positively to the company's monetization efforts in the coming year, building upon the company's impressive 13.66% revenue growth over the last twelve months. Despite these optimistic signs, BMO Capital cited intense competition from platforms like Instagram, YouTube, and TikTok as a reason for caution.
According to BMO Capital, the competitive landscape has led to a revision of estimates, prompting the decrease in Snap's price target. The firm reiterated its confidence in Snap's monetization prospects but also noted that the execution by Snap's management team remains a risk factor that could influence the company's performance.
Snap Inc's stock price target has been adjusted in light of the competitive pressures and the potential for increased monetization. BMO Capital remains positive on the company's future, emphasizing the potential upside from its advertising products, despite the challenges presented by rivals in the social media space.
In other recent news, discussions around the potential sale or ban of TikTok in the U.S. have been influencing the social media landscape, notably impacting Meta Platforms (NASDAQ:META) and Snap Inc. The U.S. Supreme Court has begun hearing arguments on this matter, with the decision expected to have significant repercussions for these companies.
Analysts from Morgan Stanley (NYSE:MS) and EMARKETER predict that Meta and YouTube could be the primary beneficiaries of a TikTok ban, while Oracle (NYSE:ORCL) could face revenue loss.
In the midst of this uncertainty, Snap Inc. has been evaluated by both BofA Securities and Evercore ISI. BofA maintained a neutral stance on Snap, citing limited user growth and uncertainties in the app's ongoing transition.
They have adjusted their revenue estimate for Snap to $6.7 billion, while keeping the price target unchanged at $14. Evercore ISI, on the other hand, reduced Snap's price target from $15 to $14, citing potential risks to the consensus Street revenue estimate of $1,341 million for Q1 2025.
These are among the recent developments that have been influencing the social media giants. As the TikTok situation unfolds, investors will be keenly observing the impact on the competitive dynamics and user engagement across platforms.
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