Snap's Q3 Revenue Surprises, But Growth Concerns Persist: Analysts Weigh In

Shares of Snap Inc SNAP were trading lower on Wednesday after the company’s third-quarter revenue beat and stock buyback announcement.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

RBC Capital Markets On Snap

Analyst Brad Erickson maintained a Sector Perform rating, while raising the price target from $9 to $10.

Snap’s third-quarter results were mixed, with the positives being the company’s solid revenue beat and ad tech improvement, Erickson said in a note.

“Less positively, growth rates remain well below the market even including inorganic subscription and while the war is impeding visibility, the company's reacceleration appears to be meaningfully lagging competitors leaving the same lingering question of whether SNAP get back to capturing marginal advertiser dollars in a more difficult macro,” the analyst wrote.

BofA Securities On Snap

Analyst Justin Post reiterated a Neutral rating and price target of $11.

“Snap’s 3Q results will likely fuel some optimism that the company’s DR solutions are gaining momentum and ad growth could further accelerate in 1H’24,” Post said.

He added, however, that the company’s growth could continue to trail peers in the fourth quarter, and “high SBC expense makes GAAP profitability unlikely before 2027.”

Check out other analyst stock ratings.

Truist Securities On Snap

Analyst Youssef Squali reaffirmed a Hold rating and price target of $11.

Although Snap’s third-quarter results were higher than “muted expectations,” management’s fourth-quarter internal forecast “points to in line revenue and below consensus AEBITDA target, given the need to continue to invest,” Squali said.

“While improving, SNAP remains more vulnerable than larger ad platforms,” like Alphabet Inc GOOGL, Meta Platforms Inc META and Amazon.com AMZN, given the company’s “under-indexing to SMBs and evolving product portfolio.”

Benchmark On Snap

Analyst Mark Zgutowicz maintained a Hold rating on the stock.

“Despite returning to y/y DR growth in 3Q and progress mentioned on its DR stack rebuild, we do not yet see a revenue inflection on the horizon,” Zgutowicz wrote in a note. “We believe a fair amount of testing/experimentation is still required across a broad set of advertiser cohorts that subsequently enables its algos to produce a broader set of conversion outcomes,” he added.

“Further, management commentary on the unpredictable nature of 4Q brand demand, particularly at these depressed levels, is troubling,” the analyst stated.

SNAP Price Action: Shares of Snap were down 1.2% to $9.58 at the time of publication Wednesday.

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