Snap
SNAP- Our rating
- hold
- 12-month target
- $6.40 +14.5%
- Expected vs. S&P 500
- -4 ptsSee the math
- Next earnings
- Nov 4In -1 daysEarnings calls page ↗
Snapchat's most valuable users, in North America, fell 7%, and subscriptions now drive more growth than ads.
Snap owns Snapchat, a camera and messaging app that 493 million people open daily, and earns most of its money from ads. Its North American users are by far its most valuable, and that group is shrinking. Job cuts have moved the business toward profit, and subscriptions are growing fast. The stock depends on profit rising faster than its best users leave.
Snapchat is a camera and messaging app that 493 million people open daily. Snap earns most of its money from ads, and North American users bring in far more per person than users elsewhere.2,3,26
What it sells
- Advertising80% of revenue, Q2 2026
Full-screen video ads, sponsored chat messages and branded camera Lenses. Brands, small businesses and app makers pay to reach Snapchat's daily users.
- Subscriptions and other20% of revenue, Q2 2026
Snapchat+, Lens+ and paid photo storage. Fewer than 3% of monthly users pay, but the line grew 85% from a year earlier.
Who buys it
Advertisers of all sizes, from big North American brands to small businesses and app makers seeking installs. North America brought in 57% of Q2 2026 revenue. Most of the 971 million monthly users never pay, so they are the audience, not the customer.
Where you've seen it
Full-screen video ads in Snapchat, and Sponsored Snaps that land in the chat tab beside messages from friends.
Snap is losing its most valuable users. North American daily users have fallen since the end of 2024, partly because Snap cut marketing for new users in late 2025. The stock fell by more than half between December and March, and a $400 million Perplexity deal ended. Evan Spiegel's answer was to cut 16% of staff, push subscriptions and win advertisers with better ads.
How the business makes money
Why Snap must earn more as its best users leave1,2,3,4,5,6,7,8,9,11,13,20,24,25
- Step 1
493 million people open Snapchat daily to message friends, giving Snap space to sell ads.
- Step 2
A North American user brings in about ten times as much as one outside North America and Europe, and that group is shrinking.
- Step 3
Subscriptions like Snapchat+ fill part of the gap. They are about a fifth of revenue and grew 85% in a year.
- Step 4
April's job cuts save more than $500 million a year, so new revenue turns into profit. Stock pay still costs about $1 billion a year.
- What shareholders get
Buybacks, $601 million in the first half, offset new shares issued as pay. The stock is betting profit rises faster than its best users leave.
Advantages
A young, daily audience
Strong advantageSnap's core asset, though it is shrinking where it pays most. Snapchat reaches 971 million people monthly, many of them teens and young adults messaging close friends.1
What's changing
Cost cuts done, profit promised for 2027
Snap's April job cuts showed up last quarter, when adjusted operating profit rose about sixfold to $250 million. Management now expects lasting positive net income from 2027, the promise the stock depends on. Snap also showed its Specs glasses on September 16, and its chief business officer leaves at year-end.1,2,3,4,7,13,23,24
Competitors
Who else an investor would consider, and how they compare.
| Company | Market value | What it does | Compared with Snap Inc. |
|---|---|---|---|
| Snap Inc.this stock | $9.47B | Snapchat is a camera and messaging app that 493 million people open daily. Snap earns most of its money from ads, and North American users bring in far more per person than users elsewhere. | |
| Meta PlatformsMETA | $1.61T | Runs Facebook, Instagram and WhatsApp, paid for by the best-targeted ads online. | Meta is far bigger and better at ads; Snap's edge is younger users.16 |
| RedditRDDT | $26.64B | Runs topic forums where strangers discuss everything, earning from ads and data licensing. | Reddit grows about three times faster, and profitably; Snap has far more users.14 |
| PinterestPINS | $12.02B | Visual search app where people save ideas and shop, earning money from ads. | Pinterest sells shopping intent and is growing in North America, where Snap loses users.15 |
| TikTok (ByteDance, private)private | — | Endless short videos picked by an algorithm, competing for young people's screen time. | TikTok wins on entertainment; Snap wins on private messaging between close friends. |
Leadership
Who runs the company, and how the stock has done under the CEO.
Leadership sources (4) · researched Oct 2026
- L1Snap Inc. Management · Snap Inc., 2026-10-11
- L2Snap Inc taps VP of finance for CFO · CFO Dive, 2026-04-21
- L3Guggenheim reiterates Snap stock rating on user growth data · Investing.com, 2026-09-02
- L4Snap CEO Spiegel defends Specs as long-term bet, pushes back against activist pressure · Reuters / Yahoo Finance, 2026-06-16
Bull vs. bear: two bets on the same stock
- 1
A share is a small slice of the company. Its value comes from the profits the company will make in the future.
- 2
Nobody knows those profits yet. Buyers (bulls) pay today's price betting they'll beat what most people expect. Sellers (bears) bet they'll fall short.
- 3
When results come in, the price moves toward whichever side was right, and that side makes money.
Will Snap post positive net income in 2027, as management expects, while its North American daily users keep shrinking?1,2,3,4,5,11,20,21
If subscriptions and better ad tools keep revenue growing near 19% while costs stay flat, Snap turns profitable in 2027 and the stock rises from a very low price.
- Costs are under control. After April's job cuts, adjusted costs rose just 4% last quarter.
- Subscriptions have plenty of room to grow. Fewer than 3% of monthly users pay for Snapchat+ and other plans.
- Snap is growing and generating cash. Free cash flow has been positive eight quarters running. Snap expects revenue to grow 13% to 15% this quarter.
- The stock is cheap by its own history. It trades at about 1.3 times expected sales, well under half its five-year median.
If North American users keep leaving and youth-safety trials force product changes, growth fades, stock pay keeps Snap unprofitable, and the low price is deserved.
- Each lost North American user costs a lot. A user there brings in about ten times as much as one outside North America and Europe.
- Ads, the core business, are barely growing. Ad revenue rose only 3% in the first quarter, and the second quarter leaned on World Cup spending.
- Real profit is still far off. Stock pay of $237 million and job-cut costs turned last quarter's adjusted operating profit into a net loss.
- Lawsuits could force product changes. Two more youth-harm trials including Snap start in October, and management warned of significant product changes.
Where Delphi landsholdWe think today's price already weighs both sides fairly.See why
What to watch
The numbers that will settle the debate.
- Expected earnings per share
- $0.00
- Expected revenue
- $1.73B
What to listen for: Whether 2027 cost plans keep Snap on track for positive net income, and whether North American daily users stop falling.18
What would prove this wrong
- ✕Net income stays negative through 2027 despite the cost cuts.
- ✕Ad revenue growth falls back toward the 3% seen in Q1 2026.
- ✕A youth-harm verdict forces costly product changes or large payments.
- ✕Subscription growth stalls as Snapchat+ reaches its likely paying audience.
The stock is cheap at 1.3 times expected sales, but new employee shares absorb most of the per-share sales growth, so expected gains trail the S&P 500 slightly.
- 12-month target
- $6.40 (+14.5%)
- S&P 500, same method, with dividends
- +18.5%
- Expected vs the market
- -4 points
The math behind the recommendation
Three 12-month price scenarios, weighted by probability, compared with the S&P 500 under the same method.
Subscriptions and ad tools keep revenue growing near 15%, Snap posts net income in 2027, and investors pay more for each dollar of sales.
$4.54 sales per share × 1.6 = $7.39
Revenue grows 8% to 10% a year as analysts expect and Snap roughly breaks even, while employee stock pay adds about 6% more shares.
$4.47 sales per share × 1.5 = $6.62
North American users keep falling, a youth-safety ruling forces product changes and growth slows below 7%, leaving the stock near today's low price per dollar of sales.
$4.39 sales per share × 1.1 = $4.81
Why these odds: Snap beat earnings estimates four straight quarters, and 2027 profit estimates rose from 10 to 13 cents a share in 90 days. Youth trials cap the bull odds.
How the prices are built: Wall Street expects sales per share of $4.47 for the year starting a year from now (analysts range from $4.31 to $4.60). Today the stock trades at 1.3 times next year's sales per share; its five-year middle is 3.07.1,3,18,19,20,21,22
What tests the call: Q3 2026 earnings and the first view of 2027 costs (Nov 4)
Buy means expected to beat the S&P 500 by 10+ points over 12 months; Sell means expected to trail it by 10+. Inputs gathered Oct 5; the recommendation updates with the price every day. Model-generated, not personalized investment advice. How ratings work · Track record
At $5.59, Snap is cheaper than usual against its own sales
Snap trades at 1.3 times the sales analysts expect over the next 12 months. That ratio is the multiple: what investors pay today for each dollar of a year's sales. That is cheaper than it has been 80% of the time over the past five years, when the middle was 3.1.
Analysts expect sales to grow about 3% the year after.
- Snap multiple
- 1.3×
- Its usual multiple
- 3.1×
- Base case
- +18%
- Bear case
- −14%
Price over the next 12 months' expected sales.
The middle of the past five years.
Our most likely 12-month outcome from $5.59.
Bull case +32%.
The skewOur bear case loses about 76¢ for every $1 our base case makes. That ratio, how much you stand to lose against how much you stand to make, is the skew.
Last earnings
No reported quarters available.
Limits of this analysis
Claims that rest on thin or conflicting sources, estimates that had to be extended, and judgment calls.
- ?The valuation history divides quarter-end prices by sales Snap later reported, not forecasts held then. Its 3.1 median includes late-2021 and early-2022 readings of 13 to 16 times sales.
- ?2028 sales rest on one MarketScreener consensus figure, $8.16 billion. No published low or high exists, so we applied 2027's analyst spread.
- ?We assume 125 million new shares a year from stock pay, from first-half vesting, but 69 million were issued then. Management also plans a new buyback to hold 2027's share count flat.
- ?Q2 was helped by World Cup ad spending and hurt by $129 million of one-time job-cut costs, so it is not a clean guide to future quarters.
- ?Youth-harm trial outcomes are unknown and Snap's past settlements were confidential, so no figure in this story or the call reflects legal costs.
Sources
Written Oct 5. Numbers link to these sources.
- 1Snap Inc. Announces Second Quarter 2026 Financial Results · Snap / SEC (Form 8-K), 2026-08-03
- 2Snap Q2 2026 prepared remarks · Snap / SEC (Form 8-K), 2026-08-03
- 3Snap Inc. Form 10-Q, quarter ended June 30, 2026 · Snap / SEC, 2026-08
- 4Snap Q1 2026 investor letter · Snap / SEC (Form 8-K), 2026-05-06
- 5Snap Inc. Announces Fourth Quarter and Full Year 2025 Financial Results · Snap / SEC (Form 8-K), 2026-02-04
- 6Snap Q4 2025 investor letter · Snap / SEC (Form 8-K), 2026-02-04
- 7Snap is cutting 1,000 jobs, 16% of its workforce · TechCrunch, 2026-04-15
- 8Snap shares rocket 15% on strong forecast, $400 million Perplexity deal · CNBC, 2025-11-05
- 9Snap issues cautious guidance as Perplexity deal ends, Middle East 'geopolitical situation' causes uncertainty · CNBC, 2026-05-06
- 10Earnings call transcript: Snap beats Q2 2026 estimates as shares jump 17% · Investing.com, 2026-08-03
- 11Snap is losing its $10 users and gaining $1 ones. It beat anyway, and the stock jumped. · The Next Web, 2026-08
- 12Snap Q4 2025 slides: Revenue up 10% as profitability improves, stock dips · Investing.com, 2026-02-04
- 13Snap will show off its AR Specs at a September 16 event · Engadget, 2026-07
- 14Reddit Reports Second Quarter 2026 Results · Business Wire, 2026-07-30
- 15Pinterest Announces Second Quarter 2026 Results, Delivers 18% Revenue Growth and Record Users · Business Wire, 2026-08-04
- 16Meta Q2 2026 slides: revenue surges 28% as AI spending pressures profits · Investing.com, 2026-07-29
- 17Snap Jumps 6% as Fundamentals Outweigh Regulatory Pressure · 24/7 Wall St., 2026-09-30
- 18Snap Inc. (SNAP) Analyst Ratings, Estimates & Forecasts · Yahoo Finance, 2026-10-05
- 19Snap Inc. (SNAP) Stock Forecast · StockAnalysis, 2026-10-05
- 20Snap Inc. (SNAP) Historical Prices · Yahoo Finance, 2026-10-05
- 21Snap Inc. company financial data (XBRL facts) · SEC EDGAR, 2026-10-05
- 22Snap Inc. (SNAP) Financial Data, Forecasts and Estimates · MarketScreener, 2026-10-05
- 23Snap Inc. Form 8-K: departure of Chief Business Officer · Snap / SEC (Form 8-K), 2026-09-08
- 24Snap Inc. Form 8-K: headcount reduction of about 16% · Snap / SEC (Form 8-K), 2026-04-15
- 25Introducing Specs augmented reality glasses · Snap Newsroom, 2026-06-16
- 26Snap Inc. Form 10-K for the fiscal year ended December 31, 2025 · Snap / SEC, 2026-02-05