11:34 AM EST, 11/06/2025 (MT Newswires) -- Snap (SNAP) delivered Q3 results ahead of Morgan Stanley's expectations, but its forward user growth faces uncertainty as new age verification rules roll out, and its revenue growth is still not "outstanding" compared with peers, the investment firm said in a note Thursday.

Snap's Q3 performance was supported by "better forward profitability and growth," including the company's roughly $400 million deal with Perplexity, the note said.

Q3 revenue came in about 1% above Morgan Stanley's estimates as strength in Europe and the Rest of the World offset weakness in North America large advertiser spending, which declined modestly in the quarter, according to the note.

Starting in Q4, Snap may see a decline in daily active users, or DAUs, as Apple (AAPL) begins platform-level age verification that could help the company identify and remove users under 13. Morgan Stanley now forecasts 473 million DAUs in Q4, down 5 million sequentially, although the share of users under 13 on the platform remains uncertain.

These user pressures are expected to persist into 2026 as Alphabet (GOOG) is also expected to implement similar age verification measures, according to the note.

Morgan Stanley lifted Snap's price target to $8.50 from $8 and kept an equal-weight rating.

Shares of Snap were up more than 11% in recent trading.

Price: 8.12, Change: +0.82, Percent Change: +11.25