Trump says Iran war "close to over" amid hopes for more negotiations
Investing.com - BMO Capital raised its price target on Snap Inc (NYSE:SNAP) to $15 from $13 while maintaining an Outperform rating, citing headcount reductions and artificial intelligence-driven efficiencies. With shares currently trading at $5.96, the stock appears undervalued according to InvestingPro analysis, which places it on the platform’s Most Undervalued list.
Snap will cut 16% of its headcount, eliminating approximately 1,000 employees and 300 open roles to streamline operations and reallocate resources. The company expects the reductions to deliver roughly $500 million in annualized cost savings while anticipating a $95 million to $130 million pre-tax severance charge.
The social media company stated that 65% of new code is now generated by AI, which has uncovered more than 7,500 bugs and helps its agents answer over 1 million support questions per month. BMO said more tech companies may look to reduce headcount in coming quarters as AI efficiencies become clearer.
Snap provided updated first-quarter 2026 revenue guidance of $1.529 billion, representing 12% year-over-year growth, and adjusted EBITDA of $233 million. The guidance exceeds prior estimates of $1.50 billion to $1.53 billion in revenue and $170 million to $190 million in adjusted EBITDA. Analysts predict the company will be profitable this year, according to InvestingPro Tips, with EPS forecast at $0.48 for fiscal 2026. Investors seeking deeper analysis can access the comprehensive Pro Research Report, available for SNAP and 1,400+ other US equities.
BMO increased its 2026 and 2027 adjusted EBITDA estimates to $1.25 billion and $1.50 billion from prior estimates of $1.03 billion and $1.18 billion. The firm said shares are attractively valued at approximately 7 times its increased 2027 adjusted EBITDA estimate.
In other recent news, Snap Inc. has announced a significant restructuring program that will impact approximately 1,000 positions, accounting for 16% of its full-time workforce. The company anticipates that these layoffs, along with the closure of around 300 open roles, will lead to annualized cost savings of about $500 million. This move is part of Snap’s strategy to enhance efficiency and pursue profitable growth, as stated by CEO Evan Spiegel.
In addition to the restructuring, Snap has entered into a multi-year strategic agreement with Qualcomm Technologies. This partnership will utilize Qualcomm’s Snapdragon system-on-a-chip technology for future generations of augmented reality glasses developed by Specs Inc., a Snap subsidiary. The collaboration marks a significant step for Specs Inc. as it prepares to launch its advanced eyewear later this year.
Meanwhile, Wolfe Research has reiterated its Peerperform rating on Snap stock, reflecting the company’s ongoing developments. However, Stifel has lowered its price target for Snap from $5.50 to $4.50, maintaining a Hold rating due to concerns over potential advertising budget cuts affecting smaller social media platforms. These recent developments highlight Snap’s efforts to navigate current challenges while exploring new technological ventures.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.