Snap Stock Faces Renewed Bearish Pressure : Could Stock Have Another Down Year?

Snap Inc. (NYSE:SNAP) is experiencing renewed bearish sentiment on Wall Street, adding to a year that has already seen significant price declines. This negative pressure comes as BNP Paribas initiated coverage of the social media company with an ‘Underperform' rating, signaling further potential downside for the stock.

The SNAP stock price is 0.88% lower in the pre-market session at $7.92, following on from what has been a difficult year for holders of the stock in 2025.

The initiation of the ‘Underperform' rating by BNP Paribas, coupled with a price target of $8, has contributed to investor unease. The analyst's concerns center on persistent declines in the U.S. market and “anemic” growth within the European Union.

A key factor influencing this bearish outlook is the perceived lack of evidence that Snap's investments are effectively improving monetization. This negative assessment arrives after a year where the stock has already fallen by 29.54%, highlighting the challenges the company faces in sustaining growth and profitability.

Despite the recent negative coverage, Snap has experienced some positive developments over the past year. In November 2025, Snap announced a $400 million partnership with Perplexity AI to integrate AI-powered search capabilities into Snapchat's Chat interface, slated for launch in early 2026.

Under the terms of the agreement, Perplexity will pay Snap over one year in cash and equity, with revenue contributions expected to materialize starting in 2026. The announcement initially spurred a surge of over 19% in Snap's stock price in pre-market trading, demonstrating the market's sensitivity to potential growth catalysts.

Snap also reported a 10% increase in revenue to $1.51 billion for the third quarter ending September 30, 2025, exceeding analysts' average estimate of $1.49 billion. Furthermore, the net loss narrowed to $104 million from $153 million a year prior. The advertising business, which accounts for approximately 90% of Snap's revenue, reported a 5% increase to $1.32 billion, with direct response ad revenue surging 8% during the quarter. This positive earnings report provided a temporary boost to investor confidence.

However, Snap faces increasing competition in the short-form video market. The unveiling of OpenAI's social video app, Sora, in October 2025, introduced a new competitive dynamic. This development, coupled with existing concerns over consumer sentiment, contributed to a 9.2% decline in Snap's stock price, underscoring investor sensitivity to competitive pressures.

Price Targets

In an effort to manage its capital structure, Snap announced the pricing of $550 million aggregate principal amount of 6.875% senior notes due 2034 in August 2025. The net proceeds are earmarked for repurchasing outstanding convertible senior notes due in 2026, 2027, and 2028. This financial maneuver aims to optimize the company's debt obligations and potentially reduce future interest expenses.

The company's strategic initiatives, including its focus on augmented reality (AR) with the planned launch of its sixth-generation “Specs” in 2026, and the acquisition of Saturn to enhance teen engagement, represent potential growth avenues. However, the company must demonstrate its ability to effectively monetize these investments and navigate the increasingly competitive landscape.

The initiation of a bearish rating from BNP Paribas serves as a stark reminder of the headwinds facing Snap. While strategic partnerships and positive earnings provide some optimism, the company must navigate an increasingly competitive landscape and prove it can effectively monetize its user base to overcome the prevailing negative sentiment.