One-glance verdict
Within fair range
$7.71 our estimate vs market $5.53
Wall Street consensus: $7.38 (-4.2% lower than our fair-value estimate)
28% below our estimate
Fundamentals snapshot
Snap Inc.
SNAP · NYQ · Communication Services · Internet Content & Information
Current price
$5.53
52-week range
$3.81 - $9.28
Market cap
$9.34B
Balance sheet
Distressed
-4.36x Concerning
Net debt $1.57B. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
2 Risks
2 rewards · 2 risks
- Reward Revenue grew 7.1% last year.
- Reward Free cash flow was positive in 5/10 years.
- Risk Net debt grew 409.2% over 3 years.
- Risk Return on equity was -15.6% last year — the company lost money on shareholders' equity.
What this company does
Snap Inc.
Snap Inc. is the company behind Snapchat, a popular app where people send picture and video messages to their friends. The company makes the vast majority of its money by selling advertising to businesses that want to reach Snapchat's large and mostly young audience. Therefore, Snap's financial success depends on its ability to keep users engaged on the app so it can sell more valuable ads.
How the company got here
Snap Inc. started with an idea between three Stanford University students in 2011 for an app that let users send photos that would disappear. Initially called Picaboo, the app was rebranded as Snapchat and gained popularity among teenagers for its temporary nature. The company, originally named Snapchat Inc., turned down acquisition offers from larger companies and officially became Snap Inc. in 2016 as it prepared to sell more than just the app. It went public in 2017, raising money from investors to fuel its growth.
What it actually does
Snap is a technology company that calls itself a camera company. Its main product is Snapchat, a mobile app focused on visual communication through photos and short videos, known as Snaps, that disappear after they're viewed. Users can add fun filters and lenses, many of which use augmented reality (AR) (a technology that overlays computer-generated images on the real world), to their Snaps. The company also develops hardware, including camera-equipped sunglasses called Spectacles.
Advertising
The vast majority of Snap's money comes from selling advertisements on Snapchat. Businesses pay Snap to show ads to the millions of people using the app. These ads can appear between friends' Stories (collections of Snaps from the last 24 hours), in the Discover section (content from publishers), or as sponsored filters and lenses that users can apply to their own Snaps. This is the company's largest business, making up over 90% of its total revenue (the money a company brings in from selling its products and services).
Snapchat+
A smaller but growing part of the business is Snapchat+, a paid subscription service. Users can pay a monthly fee to get access to exclusive features, early access to new tools, and other special abilities within the Snapchat app that are not available to free users. This provides a direct stream of revenue (money a company earns from its business activities) from users themselves, rather than relying solely on advertisers. While it's a small slice of the company's total income, it is growing quickly.
What management is betting on now
Snap's leadership is focused on three main areas for future growth: increasing its user community, growing its advertising revenue, and pushing the boundaries of augmented reality (AR). They are investing heavily in their advertising platform to make it more effective for businesses of all sizes and are looking to turn Snapchat into more of a shopping destination. The company also sees a big future in AR and is continuing to develop its Spectacles glasses, betting that computing will eventually move from phone screens to wearable devices.
Price history
How the share price has moved
—
Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$71.83M
FY2024 Q4
$182.36M
FY2025 Q1
$114.40M
FY2025 Q2
$23.79M
FY2025 Q3
$93.44M
FY2025 Q4
$205.56M
FY2026 Q1
$286.01M
FY2026 Q2
$120.54M
Revenue
$1.60B
Net income
$-163.96M
Diluted EPS
-0.10
Operating cash flow
$176.21M
Free cash flow
$120.54M
Fetching…
Sources
Revenue
$1.53B
Net income
$-88.95M
Diluted EPS
-0.05
Operating cash flow
$326.78M
Free cash flow
$286.01M
Fetching…
Sources
Revenue
$1.72B
Net income
$45.21M
Diluted EPS
0.03
Operating cash flow
$269.58M
Free cash flow
$205.56M
Fetching…
Sources
Revenue
$1.51B
Net income
$-103.54M
Diluted EPS
-0.06
Operating cash flow
$146.49M
Free cash flow
$93.44M
Fetching…
Sources
Revenue
$1.34B
Net income
$-262.57M
Diluted EPS
-0.16
Operating cash flow
$88.49M
Free cash flow
$23.79M
Fetching…
Sources
Revenue
$1.36B
Net income
$-139.59M
Diluted EPS
-0.08
Operating cash flow
$151.61M
Free cash flow
$114.40M
Fetching…
Sources
Revenue
$1.56B
Net income
$9.10M
Diluted EPS
0.01
Operating cash flow
$230.63M
Free cash flow
$182.36M
Fetching…
Sources
Revenue
$1.37B
Net income
$-153.25M
Diluted EPS
-0.09
Operating cash flow
$115.87M
Free cash flow
$71.83M
Fetching…
Sources
Is it cheap or expensive?
Fair value $7.71 vs current price $5.53
Wall Street consensus is the average analyst price target: $7.38 (-4.2% lower than our fair-value estimate).
Our most-likely fair value is $7.71 a share — about 39.5% away from today's price of $5.53, so the stock currently looks fairly priced.
Is it drowning in debt?
Distressed
Net debt $1.6B. Interest coverage -4.4x.
Net debt
$1.57B
Interest coverage
-4.36x
Snap Inc.'s profit covers its interest bill about 0.0 times over. which is weaker than most peers shown here.
Distressed
Worse cushion
Baseline
Better cushion
SNAP
BASELINE
Snap Inc.
Total debt $4.23B Interest coverage -4.36x This is the baseline the peer rows are being compared against.
Total debt $1.20B Interest coverage 21.03x This peer still has a real interest-payment cushion, while SNAP does not.
Total debt $112.32B Interest coverage 71.48x This peer still has a real interest-payment cushion, while SNAP does not.
Total debt $3.67B Interest coverage 6.17x This peer still has a real interest-payment cushion, while SNAP does not.
Total debt $541.11M Interest coverage 70.90x This peer still has a real interest-payment cushion, while SNAP does not.
What you should know
The case for and against SNAP
2 Rewards
2 Risks
Rewards
-
Revenue grew 7.1% last year.
-
Free cash flow was positive in 5/10 years.
Risks
-
Net debt grew 409.2% over 3 years.
-
Return on equity was -15.6% last year — the company lost money on shareholders' equity.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
—
Forward P/E
7.12x
P/B
4.82x
P/S
1.47x
EV/EBITDA
-72.10x
PEG ratio
508.87x
Profitability
How much profit each dollar creates
Gross margin
57.3%
Operating margin
-2.6%
Net margin
-4.9%
ROE
-15.6%
ROA
-2.7%
Health
Liquidity and balance-sheet strength
Debt / equity
2.19x
Current ratio
2.94x
Quick ratio
2.72x
Total debt
$4.23B
Total cash
$2.66B
Growth
How the business has been compounding
Revenue TTM
$6.35B
Revenue 5Y CAGR
9.6%
EPS TTM
-0.18
EPS 5Y CAGR
—
Cash flow
How much cash the business throws off
Operating CF TTM
$919.06M
Free CF TTM
$437.19M
FCF margin
6.9%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
—