Snap (SNAP) AI Stock Analysis

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Snap

(NYSE:SNAP)

64Neutral

Snap's overall score reflects its strong revenue growth and strategic advancements in subscription services and augmented reality. However, ongoing profitability challenges and a weak valuation impact the score negatively. The technical analysis suggests a bearish trend, although the company's strategic focus on AI and AR could drive future growth if successfully implemented.

Positive Factors

Advertising Innovation

Sponsored Snaps is enabling the first ever monetization of the chat inbox with an innovative, non-intrusive ad format that gives users the choice to engage.

Revenue Diversification

Snap continues to build revenue diversification and deepen the density of its advertiser count.

Revenue Growth

Snap's monthly active users reached 900 million, with Spotlight crossing 500 million users, showing growth in content viewers and watch time.

Negative Factors

Advertising Environment

Snap did not issue second-quarter revenue guidance amid a weakening ad environment, highlighting challenges in advertising visibility.

Competitive Pressure

The competitive landscape is daunting, and the gen AI movement favors the largest platforms.

Macroeconomic Challenges

Management's strategic rationale for withholding 2Q guidance includes tariffs, weakening consumer sentiment, and ad budget volatility dynamics.

Snap (SNAP) vs. S&P 500 (SPY)

Market Cap

$15.21B

Dividend YieldN/A

Average Volume (3M)47.05M

Price to Earnings (P/E)―

Beta (1Y)1.39

Revenue Growth14.91%

EPS Growth59.90%

CountryUS

Employees5,061

SectorCommunication Services

Sector Strength84

IndustryInternet Content & Information

Share Statistics

EPS (TTM)-0.08

Shares Outstanding1,417,027,800

10 Day Avg. Volume57,746,073

30 Day Avg. Volume47,054,858

Financial Highlights & Ratios

PEG Ratio-1.03

Price to Book (P/B)6.05

Price to Sales (P/S)0.00

P/FCF Ratio46.71

Enterprise Value/Market Cap1.12

Enterprise Value/Revenue0.81

Enterprise Value/Gross Profit5.71

Enterprise Value/Ebitda-6.84

Forecast

1Y Price Target

$9.60

Price Target Upside6.31% Upside

Rating ConsensusHold

Number of Analyst Covering30

Snap Business Overview & Revenue Model

Company DescriptionSnap Inc. operates as a camera company in North America, Europe, and internationally. The company offers Snapchat, a camera application with various functionalities, such as Camera, Communication, Snap Map, Stories, and Spotlight that enable people to communicate visually through short videos and images. It also provides Spectacles, an eyewear product that connects with Snapchat and captures photos and video from a human perspective; and advertising products, including AR ads and Snap ads comprises a single image or video ads, story ads, collection ads, dynamic ads, and commercials. The company was formerly known as Snapchat, Inc. and changed its name to Snap Inc. in September 2016. Snap Inc. was founded in 2010 and is headquartered in Santa Monica, California.

How the Company Makes MoneySnap Inc. primarily generates revenue through digital advertising. The company offers various advertising products, including Snap Ads, which are full-screen vertical video ads, Story Ads, Collection Ads, and Dynamic Ads tailored for direct response marketing. Snap also provides augmented reality (AR) advertising experiences, allowing brands to engage users through interactive AR lenses and filters. Additionally, Snap's Discover feature enables media partners to create content, providing another avenue for advertising. Partnerships with content creators and media companies enhance its content offerings, attracting more users and advertisers to the platform. Snap's advertising revenue model is complemented by its data analysis tools that help advertisers target and measure the impact of their campaigns effectively.

Snap Key Performance Indicators (KPIs)

Any

Total Daily Active Users

Total Daily Active Users
Tracks the overall number of users engaging with Snap daily, indicating the platform's popularity and user retention.

Chart InsightsSnap's daily active users have shown consistent growth, reaching 460 million by Q1 2025. This upward trend is bolstered by strategic enhancements in AI and AR technologies, as well as the doubling of Snapchat+ subscribers. Despite some challenges with user engagement due to the Snapchat redesign, the company is capitalizing on direct response advertising and subscription services. However, Snap faces headwinds in North American brand advertising, which could impact future growth. The company's focus on expanding its ad platform and AR ecosystem is crucial for sustaining momentum.

Data provided by:

Main Street Data

Snap Financial Statement Overview

Summary

Snap shows a trajectory of revenue growth and improved cash flow management, yet profitability remains a key challenge with continued losses. The improvement in leverage and cash reserves provides stability, but the company needs to address profitability to enhance financial strength further.

Income Statement

Positive

Snap's revenue has shown consistent growth, with a notable increase from the previous period, improving by approximately 3.14% in the TTM (Trailing-Twelve-Months). Despite positive gross profit margins around 54.07%, the company struggles with negative EBIT and net income, reflecting ongoing profitability challenges. Efforts to reduce the loss are evident, but profitability remains a concern.

Balance Sheet

Positive

Snap's balance sheet displays a strong cash position with a significant amount of cash and equivalents. The debt-to-equity ratio has improved due to a decrease in total debt, indicating better leverage management. However, the equity ratio remains relatively low, with stockholders' equity comprising only about 30.46% of total assets, pointing to reliance on liabilities.

Cash Flow

Positive

Operating cash flow has improved, indicating better cash generation from operations. The free cash flow has grown significantly, showcasing improved efficiency in cash management. However, the company still faces challenges with achieving positive net income, affecting the overall cash flow to net income ratios.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
5.53B	5.36B	4.61B	4.60B	4.12B	2.51B
	Gross Profit
2.99B	2.89B	2.49B	2.79B	2.37B	1.32B
	EBIT
-647.91M	-787.29M	-1.40B	-1.40B	-702.07M	-862.07M
	EBITDA
-310.94M	-492.60M	-1.10B	-1.18B	-337.55M	-742.21M
	Net Income Common Stockholders
-532.35M	-697.86M	-1.32B	-1.43B	-487.95M	-944.84M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
3.38B	3.38B	3.54B	3.94B	3.69B	2.54B
	Total Assets
7.94B	7.94B	7.97B	8.03B	7.54B	5.02B
	Total Debt
4.24B	4.24B	4.34B	4.18B	2.63B	2.00B
	Net Debt
3.20B	3.20B	2.56B	2.75B	637.18M	1.46B
	Total Liabilities
5.49B	5.49B	5.55B	5.45B	3.75B	2.69B
	Stockholders Equity
2.45B	2.45B	2.41B	2.58B	3.79B	2.33B
Cash Flow		Free Cash Flow
295.15M	218.65M	34.79M	55.31M	223.00M	-225.48M
	Operating Cash Flow
476.74M	413.48M	246.52M	184.61M	292.88M	-167.64M
	Investing Cash Flow
-583.15M	-717.08M	570.95M	-1.06B	90.23M	-729.86M
	Financing Cash Flow
-41.39M	-428.62M	-458.79M	306.71M	1.07B	922.79M

Snap Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price9.03

Price Trends

50DMA

8.60

Positive

100DMA

9.82

Negative

200DMA

10.20

Negative

Market Momentum

MACD

0.08

Negative

RSI

56.53

Neutral

STOCH

90.99

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SNAP, the sentiment is Neutral. The current price of 9.03 is above the 20-day moving average (MA) of 8.35, above the 50-day MA of 8.60, and below the 200-day MA of 10.20, indicating a neutral trend. The MACD of 0.08 indicates Negative momentum. The RSI at 56.53 is Neutral, neither overbought nor oversold. The STOCH value of 90.99 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SNAP.

Snap Risk Analysis

Snap disclosed 65 risk factors in its most recent earnings report. Snap reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Snap Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PINS	77 Outperform	$22.31B	12.16	48.41%	―	19.35%	―
TME	76 Outperform	$20.80B	17.15	14.37%	1.19%	4.59%	83.27%
RDDT	75 Outperform	$20.82B	193.87	5.77%	―	64.12%	―
SNAP	64 Neutral	$15.21B	―	-23.97%	―	14.91%	59.90%
Sector *	60 Neutral	$13.88B	7.03	-2.76%	3.71%	2.20%	-43.04%
MTCH	59 Neutral	$7.06B	14.21	-865.98%	1.32%	0.40%	-11.05%

* Communication Services Sector Average

Performance Comparison

SNAP

Snap

9.03

-6.99

-43.63%

TME

Tencent Music Entertainment Group

16.99

1.82

12.00%

PINS

32.89

-9.88

-23.10%

MTCH

Match Group

29.41

-1.58

-5.10%

DJT

Truth Social

26.03

-26.12

-50.09%

RDDT

Reddit Inc Class A

125.32

68.94

122.28%

Snap Earnings Call Summary

Earnings Call Date:Apr 29, 2025

(Q1-2025)

% Change Since: -0.66%|

Next Earnings Date:Jul 29, 2025

Earnings Call Sentiment Neutral

While Snap Inc. reported significant growth in user base, revenue, and subscription services, there were challenges such as a decline in North American DAUs and softness in brand-oriented advertising revenue. The company highlighted optimistic future prospects with strategic investments in AI and AR, though macroeconomic uncertainties pose potential risks.

Q1-2025 Updates

Positive Updates

Significant Growth in Monthly Active Users

Snap Inc. reached more than 900 million monthly active users, marking progress towards the company's goal of 1 billion monthly active users.

Revenue Increase

Q1 revenue increased 14% year-over-year to $1.36 billion, driven by progress in direct response advertising solutions and Snapchat+ subscription business.

Strong Performance in Direct Response Advertising

Direct response advertising revenue grew 14% year-over-year, contributing to 75% of total advertising revenue.

Growth in Snapchat+ Subscribers

Snapchat+ subscription revenue increased 75% year-over-year, reaching $152 million with nearly 15 million subscribers, an increase of 59% year-over-year.

Profitability and Cash Flow

Snap reported $108 million in adjusted EBITDA and $114 million in free cash flow in Q1, reflecting improved profitability and expense discipline.

Expansion of Augmented Reality Platform

Snap has expanded its AR platform with new features for developers, including global positioning system integration and advanced hand tracking capabilities.

Negative Updates

Decline in North America Daily Active Users

DAU in North America decreased to 99 million from 100 million in the prior quarter and prior year.

Softness in Brand-Oriented Advertising

Brand-oriented advertising revenue was down 3% year-over-year due to softness in upper funnel demand.

Macroeconomic Headwinds

The company noted uncertainty with macroeconomic conditions impacting advertising demand, with specific mentions of changes to the de minimis exemption affecting some advertisers.

Company Guidance

During Snap Inc.'s Q1 2025 earnings call, several key metrics and strategic initiatives were highlighted. The company reported a 14% year-over-year increase in revenue, reaching $1.36 billion, driven by advancements in direct response advertising solutions and the growth of Snapchat+ subscriptions, which saw a 75% year-over-year increase, contributing $152 million. Snap achieved an adjusted EBITDA of $108 million and generated $114 million in free cash flow. The company's global community grew to 460 million daily active users (DAU), with notable increases in the rest of the world. However, North American DAUs slightly declined, but overall, monthly active users surpassed 900 million. Snap's focus on augmented reality (AR) continues, with more than 400,000 AR creators contributing to over 4 million lenses, and new features such as global positioning and advanced hand tracking were added to their AR platform. The company also emphasized improvements in its advertising models and the launch of new ad formats as key drivers for future growth. Despite macroeconomic uncertainties, Snap remains optimistic about its long-term business prospects, supported by its diverse revenue streams and strategic focus on AI and ML advancements.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.