Snap Stock Rallies After Q2 Earnings Beat as Analysts See Improving Ad Revenue Trends

Snap Inc (NYSE: SNAP ) shares rallied in early trading on Tuesday after the company reported upbeat second-quarter results.

Here are the key analyst takeaways: Rosenblatt Securities analyst Barton Crockett reiterated a Neutral rating, while cutting the price target from $6.40 to $6.

DA Davidson analyst Wyatt Swanson reiterated a Neutral rating, while raising the price target from $5 to $5.25.

Cantor Fitzgerald analyst Deepak Mathivanan reaffirmed a Neutral rating, while raising the price target from $5 to $6.

JPMorgan analyst Doug Anmuth maintained an Underweight rating and price target of $6.

Check out other analyst stock ratings.

Rosenblatt Securities: Snap’s revenues grew 18.9% year-on-year to $1.599 billion and adjusted EBITDA rose sixfold to $250 million, exceeding guidance of $1.52-$1.55 billion and $175-$200 million, respectively, Crockett said in a note.

While global DAU (daily active users) rose 10 million sequentially to 493 million and global MAU (monthly active users) grew 15 million to 971 million, this was "essentially all in the lower-monetizing Rest of World segment," with DAU in North America and Europe remaining unchanged, he added.

Snap’s guidance reflects a deceleration in both revenue and adjusted EBITDA growth in the third quarter to 13%-15% and 65%-92%, respectively, the analyst stated. "Snap says it intends to step up share repurchase to keep share count flat, suggesting repurchase of ~100M shares/year, at a cost of ~$600M that would mitigate cash flow if applied," he further wrote.

DA Davidson: Snap reported revenues of $1.599 billion and adjusted EBITDA of $250 million, beating consensus estimates of $1.539 billion and $193 million, respectively, Swanson said.

He added that revenues were driven by: Better momentum with large advertisers in North America Stronger international revenue growth World Cup spend Continued strength in small and medium businesses (SMBs) The results support the company’s "efforts towards sustained positive net income beginning in 2027," the analyst wrote.

While Snap is focusing on profitability, investors should watch free cash flow per share, as this gives the company the flexibility to continue investing in long-term opportunities, he added.

Cantor Fitzgerald: Snap reported revenues and EBITDA above Street expectations, mainly due to an acceleration in ad revenues, Mathivanan said.

Total DAU grew 5% year-on-year to 493 million, exceeding Street as the company’s North America user base stabilized, he added.

Management’s third-quarter revenue outlook came above expectations, while their EBITDA guide came in line due to incremental infrastructure costs, the analyst stated.

Snap expects acceleration in ad revenues and healthy growth in subscriptions from product unlocks, he noted.

JPMorgan: Snap’s ongoing efforts to improve monetization and profitability "are beginning to pay off," Anmuth said.

He added that the acceleration in ad revenue was due to: Easier comps Improvements with North America large advertisers, driven by ad platform enhancements Traction with AI-powered Smart Campaign Solutions Continued SMB and lower funnel momentum "We are encouraged by early signs of improving advertising trends, subscription traction, and focus on profitability & FCF generation, but favorable comps & the World Cup (~2 points of growth) helped, and demonstrating durability & consistent execution will be critical," the analyst further wrote.

SNAP Price Action: Shares of Snap had risen by 13.74% to $5.76 at the time of publication on Tuesday.

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