Stifel advised to sell shares of Snapchat owner. What does this have to do with TikTok?

Analysts at Stifel have advised selling shares of Snapchat's owner and expect them to fall by 19% as the social network loses audience interest. According to their assessment, the main driver of the company's growth was the expected ban of the Chinese social network TikTok in the United States, which is now probably not going to happen. Instead of Snap, Stifel recommends looking at Meta, Alphabet and Pinterest.

Investment bank Stifel has downgraded its recommendation on shares of Snap, which owns the social network Snapchat, from neutral to "sell", pointing to the excessive number of negative factors identified in the course of internal audits. Analysts lowered their target price on Snap shares from $8 to $6.5, expecting their value to fall by almost 19%.

"According to our data, the picture remains predominantly negative. And with growing confidence that TikTok will not exit the U.S. market, we believe this trend is unlikely to change anytime soon," Stifel's review noted, as quoted by CNBC.

Shares of Snap ignored a negative rating from Stifel and rose 1.2% in trading on Friday.

According to Stifel, "fresh scrutiny indicates Snap's advertising dynamics are deteriorating relative to competitors." Investing Bank lowered its forecasts for Snap's North American user base growth and advertising revenue, citing continued loss of market share, Investing.com writes.

In addition, according to Stifel, strengthening investor confidence that TikTok will maintain its presence in the United States "removes a potential positive driver" for the Snapchat platform. Analysts considered the likely blocking of the Chinese social network as such a driver. US President Donald Trump signed an executive order on September 25 approving a deal to sell part of the video service TikTok. Under its terms, the company's US business will be managed by a consortium of US players and the MGX fund from Abu Dhabi. If the Chinese side approves the deal, it will remove the issue of banning TikTok.

Stifel's opinion on Snap generally echoes Guggenheim's assessment, which the investment bank gave in early September, while maintaining a neutral rating. According to Guggenheim's analysis, Snapchat's audience reach in Ads Manager grew globally by just 2.3% in the third quarter, compared to a 3.9% increase in the second quarter. According to Apptopia, Snap downloads worldwide fell 12.6% - down from a 5.5% drop a quarter earlier. In North America, the situation looks particularly troubling, with Snapchat's Ads Manager audience reach falling 1.5% year-over-year in the third quarter, following a 1.1% drop in the second quarter. Downloads in the region plummeted by 29.8%.

According to MarketWatch, 33 out of 42 analysts tracking Snap shares maintain a neutral stance on them. Eight investment banks advise buying these securities, while five advise selling. The Wall Street consensus price target is $9.2, up 15% from the closing price on Thursday, October 23rd.

Although the online advertising market is recovering, it is primarily the large companies that are benefiting, while Snap remains under pressure, losing ground, according to a Stifel report cited by Investing.com. The investment bank noted that overall trends in digital advertising improved in the third quarter, with August and September being particularly strong, despite duty risks and macroeconomic uncertainty. According to Stifel analysts, technology companies that make money from online advertising will generally show a solid outlook for the fourth quarter. However, do not expect too optimistic forecasts from them. Close to New Year's Eve, shopping activity in the U.S. traditionally increases, but this year analysts fear that people will spend more cautiously because of economic uncertainty and rising prices. Therefore, companies are likely to assess the prospects positively, but without excessive promises.

Stifel named Meta Platforms among the favorites, thanks to Instagram's solid growth and "controllable risk" on capital expenditures in 2026. Forecasts for Pinterest were also revised upward, with analysts expecting a strong third quarter and a positive outlook supported by user growth and increased advertiser engagement. YouTube, which is owned by Alphabet, saw "positive trends", although search performance was "mixed". From The Trade Desk Stifel expects a third-quarter outperformance of consensus, but warns that "the stock's upside may be short-lived unless the company demonstrates consistent revaluation over several quarters."

This article was AI-translated and verified by a human editor