Overview
Truist Securities lowered its 12-month price target on Snap Inc. to $8.00 from $11.00 but maintained a Hold rating following the company’s latest quarterly report and forward guidance. The reduced target brings Truist’s valuation expectations closer to a Fair Value assessment, even as Snap shares are trading near a 52-week low of $5.10.
Earnings and guidance
The adjustment comes after Snap released fourth-quarter 2025 results and issued first-quarter 2026 guidance that Truist described as "relatively in line" with expectations. Revenue growth in the quarter was reported at 10% year-over-year, beating consensus by roughly 1%. EBITDA also exceeded Street expectations by 18%, reaching $358 million.
Profitability and liquidity
Despite the quarterly revenue and EBITDA beats, Snap is not profitable on a trailing-12-month basis, with a diluted earnings per share of -$0.27. Truist emphasized that the company’s balance sheet reflects healthy short-term liquidity, noting a current ratio of 3.56.
Advertising environment and user metrics
Truist pointed to muted advertising growth, which it quantified at about 5%, and said management has shown good cost discipline in that environment. However, daily active user (DAU) dynamics remain a concern: Snap’s DAU growth missed forecasts and North America, in particular, experienced a marked decline, losing 3.3 million users quarter-over-quarter. The firm expects DAU expansion in North America and Europe to remain under pressure.
Management cited reduced user-acquisition spending as a factor in the weaker DAU performance.
Customer-segment trends
Truist observed that momentum among small and medium-sized businesses and subscription products is positive, but gains in those areas have been partially offset by weaker enterprise demand, especially across North America. The mixed picture across customer segments is a key element in Truist’s cautious stance.
Perplexity partnership and potential upside
The research note highlights that Snap’s management excluded any revenue from a partnership with Perplexity in its first-quarter guidance because negotiations are still ongoing. Truist said that if that partnership materializes, it could provide upside to the firm’s fiscal 2026 estimates. Analysts collectively expect Snap to reach profitability in fiscal 2026, with a forecasted EPS of $0.44.
Analyst reactions and broader sentiment
Truist described its position on Snap as "on the sidelines" in a research note dated February 5. The cautious posture follows significant recent stock weakness: Snap shares fell 26.12% over the prior week.
Other brokerages have also adjusted targets and ratings: Piper Sandler reduced its target to $8, citing weaker DAU trends and higher projected expenses; Cantor Fitzgerald dropped its target to $7 for similar reasons. TD Cowen set a $8 target while maintaining a Hold rating. Raymond James reiterated an Outperform rating with a $10 target, highlighting the company’s emphasis on profitable growth. Benchmark kept a Hold rating, pointing to a mixed performance across key metrics.
Market implications
Truist’s move reflects a mix of positive and negative signals in Snap’s results: above-consensus revenue and EBITDA, solid liquidity, and progress in SMBs and subscriptions, alongside strained DAU trends and soft enterprise demand in North America. The potential Perplexity deal remains an open variable that Truist notes could swing estimates if revenue is recognized in future guidance.
Key metrics reiterated in the research coverage:
- Price target cut to $8.00 from $11.00
- Fourth-quarter revenue growth of 10% year-over-year; revenue beat ~1%
- EBITDA of $358 million, 18% above expectations
- Trailing-12-month diluted EPS: -$0.27
- Current ratio: 3.56
- Projected fiscal 2026 EPS (analysts): $0.44
- Recent one-week stock decline: 26.12%
- North America DAU change: -3.3 million quarter-over-quarter