Is Now The Time To Buy Snap Stock?

Snap’s stock (NYSE:SNAP) jumped 7% on Friday, June 27, after a research institution commented on improvements in Snap’s direct response advertising. This positive development could help Snap exceed the consensus earnings estimate for the current quarter. Despite this recent surge, SNAP’s stock is still down 20% for the year. However, we believe SNAP stock, currently priced around $9, presents a good buying opportunity. While there are some concerns, its moderate valuation appears to have already factored in these risks, suggesting potential for further growth.

Our conclusion is based on a comprehensive analysis of Snap’s financial health and operational performance. We compared its current valuation against its operating performance in recent years and its historical and current financial condition. Our detailed analysis, focusing on Growth, Profitability, Financial Stability, and Downturn Resilience, indicates that Snap demonstrates moderate operating performance and financial condition. That said, if you seek upside with lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative — having outperformed the S&P 500 and generated returns exceeding 91% since its inception.

Image by Souvik Banerjee from Pixabay

How Does Snap’s Valuation Look vs. The S&P 500?

Going by what you pay per dollar of sales or profit, SNAP stock looks cheap compared to the broader market.

• Snap has a price-to-sales (P/S) ratio of 2.6 vs. a figure of 3.1 for the S&P 500

How Have Snap’s Revenues Grown Over Recent Years?

Snap’s Revenues have seen notable growth over recent years.

• Snap has seen its top line grow at an average rate of 9.4% over the last 3 years (vs. increase of 5.5% for S&P 500)
• Its revenues have grown 16.4% from $4.6 Bil to $5.4 Bil in the last 12 months (vs. growth of 5.5% for S&P 500)
• Also, its quarterly revenues grew 14.4% to $1.6 Bil in the most recent quarter from $1.4 Bil a year ago (vs. 4.8% improvement for S&P 500)

How Profitable Is Snap?

Snap’s profit margins are considerably worse than most companies in the Trefis coverage universe.

• Snap’s Operating Income over the last four quarters was $-787 Mil, which represents a very poor Operating Margin of -14.7%
• Snap’s Operating Cash Flow (OCF) over this period was $413 Mil, pointing to a poor OCF Margin of 7.7% (vs. 14.9% for S&P 500)
• For the last four-quarter period, Snap’s Net Income was $-698 Mil — indicating a very poor Net Income Margin of -13.0% (vs. 11.6% for S&P 500)

Does Snap Look Financially Stable?

Snap’s balance sheet looks strong.

• Snap’s Debt figure was $4.2 Bil at the end of the most recent quarter, while its market capitalization is $15 Bil (as of 6/29/2025). This implies a moderate Debt-to-Equity Ratio of 30.0% (vs. 19.4% for S&P 500). [Note: A low Debt-to-Equity Ratio is desirable]
• Cash (including cash equivalents) makes up $3.2 billion of the $7.6 billion in Total Assets for Snap.  This yields a very strong Cash-to-Assets Ratio of 42.5%

How Resilient Is SNAP Stock During A Downturn?

SNAP stock has fared worse than the benchmark S&P 500 index during some of the recent downturns. While investors have their fingers crossed for a soft landing by the U.S. economy, how bad can things get if there is another recession? Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.

Inflation Shock (2022)

• SNAP stock fell 90.7% from a high of $83.11 on 24 September 2021 to $7.76 on 21 October 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is 17.45 on 6 February 2024 and currently trades at around $8.70

COVID-19 Pandemic (2020)

• SNAP stock fell 56.5% from a high of $19.25 on 23 January 2020 to $8.37 on 18 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 1 June 2020

Putting All The Pieces Together: What It Means For SNAP Stock

In summary, Snap’s performance across the parameters detailed above are as follows:

• Growth: Very Strong
• Profitability: Extremely Weak
• Financial Stability: Very Strong
• Downturn Resilience: Very Weak
• Overall: Neutral

The company has demonstrated a moderate performance across key financial parameters, which is reflected in its current valuation. We anticipate an expansion of its valuation multiple from present levels, especially given the recent acceleration in revenue growth amid subscriber growth and the expected improvement in profitability due to positive advertising trends.

While you would likely do well to pick SNAP stock now, you could explore the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid- and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.

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