Snap surges 18% after announcing $400M Perplexity AI search partnership
Nov 6, 2025
Key Points
- Snap announced a $400 million partnership with Perplexity to integrate AI-powered search into Snapchat, sending the stock up 18% as the company finally matches rivals' AI lab relationships.
- Snap has 477 million daily active users and 943 million monthly active users, yet trades at a lower valuation than younger AI search startup Perplexity.
- The deal arrives as Snap's stock fell 32% year-to-date, providing relief alongside third-quarter earnings that showed continued 8% year-over-year user growth.
Summary
Snap's stock surged as much as 18% on Thursday after announcing a $400 million partnership with Perplexity to integrate AI-powered search into Snapchat. The deal combines cash and equity. Snap reported 477 million daily active users in Q3, up 8% year-over-year, and 943 million monthly active users, putting the platform nearly at the billion-MAU milestone.
Every major social platform except Snap has paired with an AI lab or foundation model provider. X works with xAI, Meta uses its own systems, and Google, YouTube, and LinkedIn use Microsoft. Snap had no equivalent relationship and building one from scratch was unattractive. This deal closes that gap.
Snap trades at substantially lower valuations than Perplexity despite having almost a billion monthly active users. One speaker suggested a potential merger between the two companies could eventually unlock value, though Perplexity has been in talks with other potential partners including Apple.
Snap stock was down 32% year-to-date through Wednesday's close, so the partnership announcement provided meaningful relief. The deal was announced alongside third-quarter earnings, which showed continued user growth.