Snap (NYSE:SNAP) shares rose more than 3% intra-day today after Citi analysts raised the price target on the stock to $13 from $11, while maintaining a Neutral rating. The update reflects a cautious stance as Snap navigates challenges alongside potential growth opportunities.
The analysts highlighted that Snap’s business showed limited momentum, with progress appearing contingent on the resolution of funding agreements. Quarterly revenue remained under pressure, primarily due to the company’s decision to divert capital from e-commerce to bolster its beverage portfolio. However, management signaled a renewed focus on reinvesting in the e-commerce segment, which could drive improved performance in the fourth quarter of 2024 and into 2025. Uncertainty around the timing of these efforts tempered expectations.
Additionally, Snap continued to pursue merger and acquisition (M&A) opportunities, including the acquisition of Western Son Vodka and a recently signed letter of intent for an energy drink business. These transactions, if completed, were expected to significantly enhance financial stability, operational efficiency, and long-term performance across its brand portfolio.
While management expressed confidence in securing necessary funding and completing M&A deals, visibility into the timeline remained limited. As a result, revenue forecasts for 2024 and 2025 were lowered. Despite these challenges, the analysts maintained a Buy rating, citing favorable long-term risk-reward potential tied to the company’s strategic initiatives.