Social media players such as Snap Inc (NYSE:SNAP) are tightening costs and refocusing growth strategies, as analysts at BNP Paribas, including Nick Jones, assess the company’s path to profitability.
Restructuring Drives Cost Discipline and Profit Focus
Jones highlighted Snap’s move to cut about 1,000 jobs, or 16% of its workforce, as part of a shift toward more disciplined investment and profitable growth. The company expects more than $500 million in annualized cost savings in the second half of 2026, while prioritizing monetizable growth, higher-margin advertising, and expansion of Snapchat+. Snap also reiterated its goal of reaching one billion monthly active users and achieving net income profitability.
Updated Financial Outlook Reflects Efficiency Gains
Jones incorporated Snap’s revised guidance into his model, noting the company now expects 2026 adjusted operating expenses of $2.75 billion, down from $3 billion, and stock-based compensation of $1.05 billion, down from $1.2 billion.
Snap also guided for first-quarter 2026 revenue of $1.529 billion and adjusted EBITDA of $233 million, both above consensus estimates, while flagging restructuring charges of $95 million to $130 million, mostly in the second quarter.
Analyst Maintains Cautious Stance Despite Estimate Revisions
Jones raised his top-line estimates slightly and increased bottom-line projections more materially to reflect cost cuts, but he maintained an Underperform rating and a $6 price forecast. He pointed to ongoing concerns around declining daily active users in North America and Europe, adding that he is waiting for clearer signs of execution and user growth acceleration before turning more constructive on the stock.
Technical Analysis
Snap is sitting in the lower half of its 52-week range ($3.81 to $10.41), which keeps the longer-term recovery narrative tentative despite the bounce. The stock is trading 27.6% above its 20-day simple moving average (SMA) and 5.5% below its 100-day SMA, a split that suggests strong short-term momentum but an intermediate trend that still needs repair.
The relative strength index (RSI), a momentum gauge, is 69.31, which is near the overbought threshold and lines up with a market that’s starting to demand follow-through. RSI at 69.31 shows buyers have been in control lately, but it’s also a level where rallies often need fresh catalysts to keep accelerating.
Over the last 12 months, the stock is down 22.29%, which is consistent with a longer-term downtrend that hasn’t fully reversed yet. That longer-term pressure also shows up in the moving-average structure, with the 20-day SMA below the 50-day SMA and the 50-day SMA below the 200-day SMA — signals that the bigger trend still leans bearish even after the recent rebound.
- Key Resistance: $6.50 — Round-number area that often acts as a near-term “prove it” zone.
- Key Support: $5.00 — Psychological level where buyers often try to defend pullbacks.
Earnings & Analyst Outlook
Looking further out, the next major catalyst for the stock arrives with the May 6 (confirmed) earnings report.
- EPS Estimate: Loss of 8 cents (Flat from loss of 8 cents year-over-year)
- Revenue Estimate: $1.52 Billion (Up from $1.36 Billion YoY)
Top ETF Exposure
Significance: Because Snap carries significant weight in these funds, any significant inflows or outflows for these ETFs will likely trigger automatic buying or selling of the stock.
Price Action
SNAP Stock Price Activity: Snap shares were down 0.41% at $6.01 at the time of publication on Thursday, according to Benzinga Pro data.
Image via Shutterstock
Recent Comments