Wells downgrades Snap with company entering reinvestment period

Wells Fargo analyst Ken Gawrelski downgraded Snap (SNAP) to Equal Weight from Overweight with a price target of $11, down from $15, following the Q4 report. Snap is entering a reinvestment period and while an “upside option” remains with a potential U.S. TikTok ban, the company’s app redesign is taking longer and its advertising revenue growth “remains stubbornly below” industry levels, the analyst tells investors in a research note. Wells says Snap’s solid revenue trends are not enough to outweigh its period of investment, which is driving to “meaningful cuts” in EBITDA forecasts. The stock in premarket trading is up 2% to $11.84.