Snap stock surges 13% after announcing Perplexity AI deal, reporting strong revenue

Snap Inc. experienced a significant boost on Thursday, with its stock rising by 13% after the announcement of a substantial $400 million partnership with Perplexity AI, coinciding with the release of its third-quarter financial results. This collaboration will see the integration of Perplexity's AI-driven search engine into the Snapchat app, marking a pivotal development for the social media giant. Under the terms of the agreement, Perplexity AI will provide Snap with $400 million over the next year, utilizing a mix of cash and equity, as detailed in Snap's communication to investors. The company anticipates that the financial benefits from this partnership will begin to materialize in 2026. Benjamin Black from Deutsche Bank highlighted that this strategic alliance with Perplexity AI is a crucial move for Snap, particularly as it seeks to diversify its revenue streams amid a trend of large advertisers pulling back on spending on social media platforms, a situation similar to what Pinterest has faced. In addition to the partnership news, Snap reported robust third-quarter results, with revenues reaching $1.51 billion, surpassing the LSEG's forecast of $1.49 billion. Moreover, the company saw an 8% year-over-year increase in daily active users, totaling 477 million, which exceeded StreetAccount's expectations of 476 million.