Snap Shares Rise: What's Driving The Social Media Stock Higher?

Snap Inc (NYSE:SNAP) shares are trading higher Thursday morning after the social media company quietly settled a closely watched social media addiction lawsuit just days before a landmark trial was set to begin, easing a major legal overhang for investors.

According to The New York Times, the case in California state court centered on claims that Snapchat and other platforms were deliberately designed to keep young users compulsively engaged, contributing to mental health problems. Here’s what investors need to know.

• Snap shares are powering higher. Why are SNAP shares rallying?

Why The Settlement Matters For Investors

The settlement, whose financial terms were not disclosed, means Snap avoids having its design choices tested in front of a jury alongside internal documents and potential testimony from CEO Evan Spiegel.

Per the NY Times, plaintiffs had planned to argue that features such as endless scrolling and algorithmic recommendations made the platforms "inherently defective," drawing comparisons to the liability battles that reshaped the tobacco industry.

For Snap, founded in 2011 and best known for its Snapchat app, disappearing messages and augmented-reality lenses, the move removes the immediate risk of a precedent-setting verdict that could have spurred sweeping product changes or opened the door to large damages.

The company, which rebranded as Snap Inc. in 2016 and depends heavily on digital advertising, is still a defendant in other similar suits alongside Meta, TikTok and YouTube, so legal uncertainty has not vanished entirely.

Broader Implications For Social Media Platforms

Investors are likely interpreting Thursday's bounce as relief that one of the first bellwether cases will not proceed to trial against Snap, but the broader question of whether social media design can trigger liability remains unresolved, a risk that will continue to shadow the entire sector.

Snap Shows Mixed Momentum

Currently, Snap is trading 4.2% below its 20-day simple moving average (SMA) and 2.7% below its 100-day SMA, indicating some short-term weakness. Over the past 12 months, shares have decreased by 26.76%, and they are currently positioned closer to their 52-week lows than highs.

The RSI is at 37.21, which is considered neutral territory, while the MACD is below its signal line, indicating bearish pressure on the stock. This combination suggests mixed momentum, as the stock is not showing strong bullish signals at this time but is nearing oversold territory.

• Key Resistance: $9.00
• Key Support: $7.50

Analysts Predict Earnings Decline Amid Revenue Growth

Investors are looking ahead to the company’s next earnings report on Feb. 4, with analysts expecting a loss of 3 cents per share and revenue of $1.70 billion, up from $1.56 billion from the same quarter last year.

Snap has a consensus Hold rating among analysts with an average price target of $9.82.

Benzinga Edge Rankings

Below is the Benzinga Edge scorecard for Snap, highlighting its strengths and weaknesses compared to the broader market:

• Momentum: Bullish (Score: 6.93) — Stock is outperforming the broader market.

The Verdict: Snap’s Benzinga Edge signal reveals a moderate momentum score, indicating that while the stock is showing some strength, there are underlying challenges that investors should be aware of. Traders should watch for potential volatility as the company approaches its earnings date.

SNAP Shares Surge Thursday

SNAP Price Action: Snap shares were up 5.02% at $7.74 at the time of publication on Thursday, according to Benzinga Pro data.

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