Stifel shifted its view on Snap by moving the stock to a Hold from a more cautious stance, saying the decline in the share price this year has largely incorporated the company-specific weaknesses investors have been worried about. The brokerage kept its price target at $5.50.
Shares of Snap have tumbled roughly 37% year to date and are down about 33% since late January, a slide Stifel says makes the risk-reward profile appear more balanced at current levels.
In explaining its earlier, more negative position, Stifel pointed to several structural challenges: a shrinking user base in North America, underexploited monetization opportunities and advertising tools that lag those of competitors, which together have constrained Snap's ability to capture marketing dollars. Stifel said those problems have not gone away, but the market's recent repricing has absorbed much of the pressure tied to them.
Company disclosures in recent weeks have supported the firm's reassessment. Snap reported a sequential fall of 3 million global daily active users in the fourth quarter, driven in part by a 4 million-user decline in North America. Management also indicated it is cutting back on community growth marketing spending - a move Stifel expects will suppress engagement in the near term.
Advertising growth remains subdued, and the status of a proposed arrangement with AI firm Perplexity is still unclear. Snap had previously disclosed that Perplexity would pay about $400 million for a one-year placement in the app, but the companies have not reached agreement on a broader deployment. Because of that uncertainty, any potential revenue from a wider partnership was not incorporated into Snap's guidance.
Stifel noted that a finalized agreement with Perplexity could lift investor sentiment and add incremental revenue back into its forecasts. The brokerage also flagged expansion in Snap's subscription business as a partial counterweight to advertising headwinds: subscriptions reached 24 million users after robust net additions in the fourth quarter.
From a valuation standpoint, Stifel said Snap is trading at roughly 1.4 times next-twelve-month sales, a level well below the company's historical average and indicative, in the firm's view, of a valuation reset following the selloff.
Bottom line: Stifel's upgrade to Hold reflects its view that the market has largely priced in key growth and monetization concerns for Snap, while leaving upside tied to a completed Perplexity deal and continued subscription gains. However, near-term engagement pressures and muted ad growth remain active headwinds.