Wall Street is starting to take another look at Snap after a difficult stretch for the social media company’s stock, and one analyst now sees a much stronger case for upside.
Snap shares moved higher Monday after Rothschild Redburn upgraded the Snapchat parent to Buy from Neutral and doubled its price target to $10 from $5. Analyst Joseph Barker cited improving revenue diversity and stronger cost discipline as reasons for the more bullish call, according to TipRanks. At a recent price of about $6.06, the new target implies meaningful upside if Snap can keep improving its profit trajectory.
The move gives investors a fresh reason to revisit a stock that has spent years trying to prove it can grow beyond its core advertising business while controlling expenses. Snap remains a smaller player compared with larger digital ad platforms, but the upgrade suggests Wall Street may be growing more comfortable with its path toward better margins.
Snap is trying to build a cleaner profit story
The bullish call follows a stronger finish to 2025, when Snap showed progress across several key financial metrics.
Snap reportedfourth-quarter revenue of $1.716 billion, up 10% year over year, while gross margin reached 59%. The company also reported fourth-quarter net income of $45 million and adjusted EBITDA of $358 million, both improvements from the prior-year period.
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For the full year, Snap generated $5.93 billion in revenue, up 11% from 2024. Its net loss narrowed to $460 million from $698 million, while adjusted EBITDA increased to $689 million from $509 million. Those numbers show why the latest analyst call is focused less on user growth alone and more on whether Snap can translate its audience into a more profitable business.
Snap CEO Evan Spiegel said the company’s fourth-quarter results began to reflect its “strategic pivot toward profitable growth,” adding that the quarter showed revenue diversification and margin expansion. That framing matters because Snap’s investment case has often been hurt by questions about advertising volatility, competition, and whether the company can control costs while still investing in products like augmented reality and Specs.
Cost cuts add to Snap’s turnaround case
Snap saidon April 15 that it would cut about 1,000 employees, or 16% of its full-time workforce, and close more than 300 open roles. Spiegel told employees the company expects the changes to reduce its annualized cost base by more than $500 million by the second half of 2026, helping create a clearer path to net-income profitability.
The cuts are painful for employees, and they also show how aggressively Snap is trying to reset its expense structure. The company said advances in artificial intelligence should help teams reduce repetitive work, move faster, and better support users, advertisers, and partners. That point lines up with the broader Wall Street argument that Snap’s margin profile could look different if revenue continues to grow while expenses become more disciplined.
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Snap has another revenue lever beyond ads
Snap saidits community reached 946 million monthly active users in the fourth quarter, while other revenue rose 62% year over year to $232 million. The company also said subscribers grew 71% year over year to 24 million in the quarter, showing continued traction for paid products such as Snapchat+.
That matters because subscription revenue can give Snap a steadier business line alongside advertising, which can shift quickly when marketers pull back or redirect budgets. Snap still monetizes primarily through ads, according to its annual report, and the company warned that competition for advertising dollars has increased while changes in the ad market can pressure revenue growth.
Snap’s next earnings report could test the call
Snap is scheduled to report first-quarter 2026 results on May 6 after the market closes, with its conference call set for 5 p.m. Eastern Time. That report could be an important test of the upgrade because investors will be watching for signs that cost reductions, subscription growth, and ad improvements are moving together.
The new bullish view does not erase the risks facing Snap, especially in a competitive social media market where larger rivals have deeper ad businesses and broader user ecosystems. It does, however, give investors a more defined story to follow: if Snap can keep growing revenue, expand higher-margin products, and reduce its cost base, Wall Street may have more reason to believe the company’s turnaround is gaining traction.
Related: Snap lays off 1,000 workers amid AI social media shift
