Guggenheim Lowers Snap (SNAP) Outlook on Projected 2026 Usage Hurdles and Ad Growth Lag

Snap Inc. (NYSE:SNAP) is one of the AI stocks under $20 to buy now. On December 19, Guggenheim analyst Michael Morris lowered the price target on Snap to $8.50 from $9, while keeping a Neutral rating on the shares. Moving into 2026, Morris noted that investor sentiment is being dampened by anticipated obstacles to usage growth and core advertising performance that lags behind industry peers. Consequently, the firm reduced its daily active user projections for H1 2026, signaling a belief that these operational difficulties will remain a factor beyond the short term.

In Q3 2025, Snap achieved a significant milestone by reaching 477 million daily active users/DAUs, which was an 8% increase year-over-year, while monthly active users/MAUs grew 7% to 943 million. Total revenue for the quarter rose 10% to $1.51 billion, driven by a combination of a 5% increase in advertising revenue ($1.32 billion) and a massive 54% jump in Other Revenue ($190 million), which is primarily powered by the Snapchat+ subscription service. Snap Inc. (NYSE:SNAP) demonstrated a strong path toward sustained profitability by reducing its net loss by over 30%, bringing it down to $104 million from $153 million in the previous year.

Guggenheim Lowers Snap (SNAP) Outlook on Projected 2026 Usage Hurdles and Ad Growth Lag

Snapchat remains a dominant force in AR, with over 350 million daily users engaging with AR lenses. The platform’s creator ecosystem has now surpassed 400,000 developers who have built more than 4 million lenses. The company is also doubling down on GenAI; over 500 million users have interacted with Gen AI lenses, such as the popular AI Face Swap, more than 6 billion times. Additionally, Snap Inc. (NYSE:SNAP) announced Snap OS 2.0, which is a software foundation for its next-generation AR Spectacles, which are slated for a public debut in 2026.

Snap Inc. (NYSE:SNAP) operates as an international technology company. The company offers Snapchat, which is a visual messaging application with various tabs. The company integrates GenAI and ML across its platform for interactive ‘My AI’ chatbot experiences, real-time AR Lenses, and sophisticated ad-targeting tools.

While we acknowledge the potential of SNAP to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than SNAP and that has 100x upside potential, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.