Snap Inc. (SNAP): A Diamond in the Rough for Long-Term Investors?

Is Snap Inc. (SNAP) a compelling long-term investment at its current price? With a stock price hovering around $7.83 as of May 10, 2025 (), the company fits the criteria of a “low-priced stock.” But does this valuation mask long-term potential—or is it a trap for unwary investors? Let’s dive into the data.

Snap’s Financial Turnaround: Growth Amid Struggles

Snap’s financial performance in 2024 and early 2025 reveals a company transitioning from loss-making to leaner operations. In 2024, revenue surged 15% YoY to $5.36 billion, driven by strong growth in Europe (20%) and emerging markets (35%). While the company still reported a net loss of $698 million, this marked a 48% improvement from 2023.

The Q1 2025 results are even more encouraging:
- Revenue grew 14% YoY to $1.36 billion.
- Net loss narrowed 54% to $140 million.
- Adjusted EBITDA jumped 137% to $108 million.
- Free cash flow nearly tripled to $114 million.

These metrics signal progress toward profitability, even as Snap continues to invest heavily in its core products.

User Growth: The Foundation of Snap’s Value

Snap’s user metrics are its crown jewel. Daily Active Users (DAU) hit 460 million in Q1 2025, a 9% YoY increase, while Monthly Active Users (MAU) surpassed 900 million—a milestone toward its goal of 1 billion MAU. Key drivers include:
- AR innovation: Features like the Easy Lens tool (creating 10,000+ lenses) and AI-powered My AI (55% U.S. DAU growth).
- Music integration: New lyrics features and community-driven lenses boosted engagement.
- Advertising growth: Active advertisers rose 60% YoY, with SKAdNetwork app purchases up 30%—a testament to Snap’s ad platform efficiency.

Valuation: A Mixed Picture

While Snap’s stock price is low, its valuation metrics are extremely volatile. As of May 2025:
- Market cap: $13.79 billion.
- EV-to-EBITDA: -47.41, reflecting a $311 million TTM EBITDA loss.

This negative ratio ranks worse than 100% of Interactive Media peers, which typically have positive multiples (industry median: 9.27). The red flags here are clear: Snap’s operating margins remain negative (-11.68%), and its net cash position is -$1.00 billion due to $4.21 billion in debt.

However, analysts see light at the end of the tunnel: the average price target of $11.33 (37% above the May 2025 price) suggests optimism about future EBITDA improvement.

Risks and Challenges

Snap faces significant hurdles:
1. Profitability: Despite progress, the company is still losing money. Turning EBITDA positive will require cost discipline or revenue acceleration.
2. Debt: The 1.82 debt-to-equity ratio adds pressure.
3. Competition: Meta (Facebook/Instagram) and TikTok dominate the social media landscape, making it hard for Snap to sustain premium pricing.
4. Regulatory risks: Data privacy laws and ad targeting restrictions could crimp growth.

Conclusion: A Risky, but Potentially Rewarding Bet

Is Snap Inc. the best low-priced stock for the long term? The answer hinges on two factors:
1. User engagement: Can Snap’s AR/AI innovations keep MAU growing toward 1 billion?
2. Profitability: Will EBITDA turn positive, or will losses persist?

The positives:
- Strong user growth and ad revenue trends suggest Snap is no longer a “has-been.”
- $11.33 analyst target implies a 37% upside, supported by improving cash flows.

The negatives:
- Valuation multiples are a disaster by traditional metrics.
- Debt and competition could limit upside.

For long-term investors willing to bet on Snap’s cultural relevance (e.g., Gen Z’s preference for ephemeral content) and its innovation pipeline (AR, AI, Spectacles), the stock’s low price creates a high-risk, high-reward opportunity.

Final Take: Snap is not a “best” low-priced stock, but it’s a compelling speculative play for those who believe in its vision. The jury’s out on whether the stock will deliver long-term returns—but the data suggests patience could pay off.

Note: Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.