Snap Stock Surges 8% After Rothschild & Co Redburn Upgrades – Is It Time to Buy?

TLDR

• Rothschild & Co Redburn raised its rating on Snap from Neutral to Buy, establishing a $10 price target
• SNAP shares surged up to 8.14%, reaching a high of $6.00 compared to the previous close of $5.65
• The upgrade was based on anticipated GAAP profitability in 2025, increased advertising demand, and rising subscription revenue
• The consensus among 30 analysts still leans toward a Hold rating, with an average price target of $8.08
• Insiders sold more than 2.5 million shares valued at approximately $13.3 million in the most recent quarter

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(SeaPRwire) –   Snap received a confidence boost on Monday when Rothschild & Co Redburn upgraded its stock from Neutral to Buy, pushing shares up by as much as 8.14% during the trading day.

Snap Inc. (SNAP)

The stock reached a peak of $6.00, an increase from Friday’s closing price of $5.65. Trading volume stood at roughly 6.8 million shares during midday trading.

Rothschild established a $10 price target for SNAP — a level the stock hasn’t achieved in a while, considering its nearly 30% drop so far this year.

The firm cited improving fundamentals as the rationale behind its upgrade. These include an expected shift to GAAP profitability in 2025, a more robust core advertising segment, and expanding subscription revenue.

Enhanced ad products and features were characterized as a “specs-driven boost” to the company. The momentum in subscriptions was emphasized as an indicator of more stable revenue in the future.

Snap announced fourth-quarter revenue of $1.72 billion, a 10.2% year-over-year increase and marginally above the $1.70 billion analyst consensus.

Earnings Miss Clouds the Picture

In terms of earnings, Snap reported quarterly EPS of $0.03, falling short of the consensus estimate of $0.15 by $0.12.

The company has a negative return on equity of 20.72% and a negative net margin of 7.76%. Analysts, on average, project a full-year EPS of -$0.12 for fiscal 2025.

The stock’s 50-day moving average is $4.98, and its 200-day moving average is $6.67.

Even with Monday’s gain, analysts overall remain cautious. Among the 30 analysts covering the stock, one gives it a Strong Buy rating, six a Buy, twenty a Hold, and three a Sell. The average price target is $8.08.

Guggenheim and Rosenblatt both reaffirmed Neutral ratings in mid-April, with price targets of $6.50 and $6.40, respectively.

Insider Selling Continues

Insiders have been trimming their holdings. Chief Accounting Officer Rebecca Morrow sold 16,499 shares at $4.70 in February, which amounts to a 3.41% decrease in her position.

Insider Ajit Mohan sold 119,339 shares at the same price, a 2.26% reduction in his stake.

In total, insiders sold 2,565,573 shares valued at around $13.33 million in the previous quarter.

Institutional investors own 47.52% of the stock. A number of smaller funds increased their positions in the third and fourth quarters of last year, though the additions were small.

Snap’s market capitalization is roughly $9.54 billion, with a debt-to-equity ratio of 1.53 and a current ratio of 3.56.

Prior to Monday’s upgrade, the latest analyst report was from Mizuho in February, which lowered its price target from $9.00 to $7.00 while maintaining a Neutral rating.