Snap Inc. (SNAP) saw its stock price tumble by 8.36% on February 5, 2025, closing at $10.63, down from the previous day's close of $11.60. The stock opened at $11.54 and reached a high of $11.57 before plummeting to a low of $10.60, with trading volume surging to 280% of the average. The decline was primarily driven by a downgrade from Wells Fargo, which lowered its rating from "overweight" to "equal weight" and slashed its price target from $15 to $11. This downgrade overshadowed Snap's better-than-expected Q4 earnings, which reported an EPS of $0.16, surpassing the consensus estimate of $0.14, and revenue of $1.55 billion, slightly above expectations.
Despite the earnings beat, Snap's mixed Q1 guidance and concerns over its app redesign and advertising growth weighed heavily on investor sentiment. Wells Fargo's downgrade highlighted these issues, noting that Snap's ad revenue growth remains below industry standards and that the company's aggressive reinvestment plans could impact future profitability. Other analysts offered mixed reactions, with some raising their price targets slightly, while others, like JPMorgan, also lowered theirs. The market's focus on these challenges led to Snap's significant drop, marking its largest daily percentage decline since August of the previous year.