-- CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:
We keep our 12-month target at $7.00. SNAP announced a 16% workforce reduction (about 1,000 employees) and will eliminate over 300 open roles. The company expects the restructuring to deliver over $500M in annualized savings by the end of the year but to incur $95M-$130M in restructuring charges. We view this as a pivotal move toward profitability (will allow SNAP to turn GAAP profitable) amid intense competition from TikTok/Instagram and emerging threats from AI, while it faces pressure from activist investor Irenic Capital Management. The investor took a recent 2.5% stake and has been advocating for cost cuts and portfolio optimization. CEO Evan Spiegel cited advancements in AI as a key driver, noting that AI tools now generate over 65% of new code, enabling smaller, more efficient teams. We believe the restructuring positions SNAP to accelerate its path to net income profitability and favors profits over growth near term. We also note that the previously-announced Perplexity deal will no longer consummate.