Even though social media company Snap (NYSE:SNAP) reported impressive Q3 results, analysts don’t appear convinced, predicting it may face headwinds in light of the war in the Middle East and growing competition. Shares of the company fell in Wednesday’s trading.
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Investment firm Morgan Stanley noted the impressive Q3 Snap posted. However, it said Snap faces “uncertainties and hurdles” going forward. Morgan Stanley, which has an Underweight rating and a $7 price target on Snap, said it needs to solve the uncertainties around its business for investors to be convinced.
Morgan Stanley listed Snap’s advertisement as one of the areas where the company needs to improve, saying it has to show it can scale up and drive its ad adoption. Additionally, Snap has to be less reliant on China-based advertisers and grow users’ engagement time on the app.
At UBS, analysts expressed concerns about Snap’s growth beyond the fourth quarter. According to the firm, it is difficult to predict how much revenue growth Snap’s system changes can drive. UBS has a Neutral rating on the stock with a price target of $11.
JP Morgan noted the challenges the company could face in light of the war in the Middle East. The investment firm said the war has affected marketer’s spending, which the analysts predict to hit in early Q4. However, JP Morgan said it expects the management to be conservative as that unfolds. JP Morgan has a $9 price target and has an Underweight rating on Snap.
At the same time, Citi noted headwinds Snap could face in the near term. The bank predicts that Snap’s growth will lag behind competitors in the upcoming quarter and that additional generative AI investments will put pressure on profits.
Citi, which is Neutral on the stock with an $11 price target, said Snap faces growing competition from rivals like Instagram, Shorts, and TikTok. With the fight for market share tighter than ever, Citi estimates decelerating user growth will affect Snap.
What is the Prediction for Snap Stock?
Turning to Wall Street, analysts have a Hold consensus rating on SNAP stock based on two Buys, 14 Holds, and one Sell assigned in the past three months, as indicated by the graphic above. Furthermore, the average SNAP price target of $10.04 per share implies 5.02% upside potential.
