Snap Stock Hits Multiyear Low, Analysts See Upside

Snap (SNAP) shares are down 34% YTD and 24% since Q2 earnings, but analysts see upside potential. Despite a disappointing earnings report, Snap posted encouraging metrics such as daily active users up 9% YoY and free cash flow turning positive. The company is focusing on augmented reality and AI tools to differentiate itself in the competitive digital ad market.

Snap (SNAP) has faced a challenging year, with shares down over 34% year-to-date and 24% since its Q2 earnings report on June 30th [1]. The stock has traded at a one-year low, reflecting profoundly negative sentiment. However, analysts remain bullish on the company, seeing potential for long-term growth.

The earnings report highlighted persistent competitive pressures and a technical glitch in Snapchat’s ad-buying platform, which allowed certain advertisers to secure bids at steep discounts, weighing on revenue growth [1]. Despite this, Snap reported several encouraging metrics. Daily Active Users grew 9% year-over-year to 469 million, led by 15% growth outside of the U.S. Monthly Active Users increased 7% to 932 million [1].

Free cash flow turned positive at $24 million, a significant turnaround from a $73 million outflow a year earlier. Revenue and adjusted EBITDA improved meaningfully from last year, and the company expects conditions to improve in August and September [1]. Global Average Revenue Per User (ARPU) held steady at $2.87, but monetization trends were stronger in developed markets: North America ARPU rose 9% to $8.33, while Europe climbed 13% to $2.65 [1].

Snap is doubling down on augmented reality (AR) and AI tools to differentiate itself in the competitive digital ad market. Spotlight, its short-form vertical video feature, now reaches over 550 million average monthly users and accounts for more than 40% of total content time on the platform [1]. Snapchat+, the company’s paid subscription service, is expanding quickly with nearly 16 million subscribers—up 64% year-over-year. At its current pace, Snapchat+ is generating an annual revenue run rate of about $700 million [1].

Looking further ahead, management is advancing its AR hardware roadmap, with the next-generation “Specs” glasses slated for a 2026 launch, part of Snap’s broader push into spatial computing and immersive content [1]. New ad products such as Promoted Places and Sponsored Snaps aim to diversify revenue and lift ARPU over time [1].

Analysts believe the market overreacted to the Q2 earnings report. While the 24% post-earnings sell-off pushed the stock to levels that seem to discount a worst-case scenario, the expanding user base, rising ARPU in developed markets, and new monetization streams like Snapchat+ could provide meaningful upside if execution improves [1].

Based on my analysis incorporating P/E, EV, and revenue multiples alongside a five-year EBITDA projection, I estimate Snap’s fair value at $10.50 per share—implying roughly 48% upside from current levels [1]. According to TipRanks, Snap holds an average Hold rating based on 28 analyst reviews, which break down into four Buys, 23 Holds, and one Sell. The consensus price target stands at $9.22, implying ~29% upside from current levels over the next twelve months [1].

While challenges remain, these trends point to a credible path back to growth. For investors willing to weather near-term volatility, today’s weakness could present a buying opportunity. In my view, sentiment has swung too far negative, opening the door for long-term investors with patience.

References:
[1] https://www.tipranks.com/news/bullish-analysts-eye-snap-upside-as-stock-hits-multiyear-low
[2] https://www.marketbeat.com/instant-alerts/snap-on-incorporated-nysesna-cfo-aldo-john-pagliari-sells-125-shares-2025-08-15/