Key insights
- Snap's stock experienced a significant drop due to broader SaaS concerns, geopolitical tensions, and regulatory headwinds in Europe. However, a strong earnings preview, including layoffs and a revised revenue forecast, has fueled a recent recovery. Upcoming earnings on May 6 will focus on Snapchat+ growth and overall user engagement, which could positively influence the stock.
So just to quickly summarize the price action since we entered 2026- much like RDDT, the Snapchat stock plummeted nearly 50 % from January 2 - March 27 even though they reported pretty good earnings on February 4. It seemed like SaaS apocalypse pulled social media stocks down regardless of financials.
As did the Iran war because of fears that small to medium sized businesses would cut ad expenses which would cut Snap’s core revenue which is ad revenue. And, because of fears businesses will cut down on second tier ad streams like Snap rather than first tier like Meta and Google/YouTube. Additionally, SNAP is a high beta stock so it moves pretty fast in either direction.
Regulations and news of an EU investigation into Snap Inc further punished the SNAP stock. Greece banned social media for people under 16 and more EU countries may follow their lead. Also, Meta lost a lawsuit which could mean an endless amount of new lawsuits which likely will target Snapchat as well.
Anyway, I had a pretty strong feeling all along that SNAP’s fall from $7 to $3.93 was unwarranted. For years, $7 was the hard floor for this stock and the company is in better shape than ever so why shouldn’t it continue to be?
Currently trading at $6 it has recovered 55 % in the past three weeks. Earnings are coming up pretty soon as they will report on May 6 after close.
They already released a preview of earnings having announced a major round of layoffs (16 % of the workforce) and that the $400 million Perplexity deal has been cancelled, and they now expect 12 % jump in revenue for Q1 YoY which is higher than their previous forecast.
What’s going to be particularly interesting for earnings on May 6 is what does Snapchat+ growth look like? Is it still going through the roof? Unlike Reddit, Snap Inc no longer relies on only one source of revenue. Ad revenue still is the main channel for revenue but subscriptions now account for a huge chunk of revenue. What will user growth be like in general? Is North American numbers going to be down? Will they have lost a lot of users due to bans or just market maturity? Will the street like their continued pivot to profitability rather than user growth?
Like I said in all my previous posts, I am not selling for under $7 no matter what. People laughed at me when I said SNAP was a bargain at $5 and absurdly cheap at $4. Well.. it’s now $6 and I still
think it’s a bargain. As do analysts as the average price target is $8.
A week ago Barclay’s raised their price target from $13 to $15.