Snap Inc. (SNAP), the company behind the photo messaging app Snapchat, built its name on disappearing messages and camera filters that lit up a generation’s social life. But despite strong engagement overseas and advances in augmented reality (AR) with its AR Spectacles, the stock has lost ground as ad budgets shifted, and bigger platforms pulled ahead. One key hurdle stemmed from Apple’s (AAPL) privacy changes, which hurt ad performance, while rivals like Meta (META) leaned into artificial intelligence to boost advertiser returns.
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Heading into its Q2 2025 report tomorrow, on August 5, Snap trades at $9.05, down 16% year-to-date. Meanwhile, the Street’s sentiment doesn’t look overly enthusiastic with an overall Hold consensus rating. Additionally, TipRanks’ Smart Score doesn’t leave much room for imagination with a score of 1!
Highlights to Watch During the Earnings Call
While Q2 could offer fresh clues, here’s what you should watch as the company heads toward a crucial earnings showcase:
Daily Users in North America: Snap closed Q1 with 460 million daily active users globally, up 9% year-over-year. But North America saw a slight drop, with users slipping to 99 million from 100 million. The U.S. market still drives much of Snap’s ad revenue, so stability here matters.
Snapchat+ Growth: Paid subscriptions reached nearly 15 million last quarter, with revenue rising 75% year-over-year to $152 million. That helped diversify revenue streams and lift cash flow. Analysts expect solid growth to continue, though likely at a slower pace.
Ad Revenue Mix: Snap’s Direct Response ads now make up 75% of total ad revenue. That strength helped offset weakness in Brand advertising, which dropped 3% last quarter. Analysts at TD Cowen and Morgan Stanley expect Q2 ad growth near 9% to 12%, helped by lower tariffs and digital ad tailwinds.
Profitability Trends: The company posted $108 million in adjusted EBITDA and $114 million in free cash flow in Q1. However, net income stayed negative at minus $698 million. Analysts expect another loss in Q2, with earnings per share forecast at -$0.15, the same as the year-ago quarter.
AI and AR Updates: Snap recently rolled out new AR glasses and added GPS and hand tracking to its AR platform. These tools boost engagement and could unlock future revenue. But there’s little visibility yet on how they translate into earnings.
Management Tone: Snap gave no revenue guidance for Q2, citing uncertainty around ad demand. During Q1, executives noted softer spending from brand marketers and ongoing pressure from global regulations.
Is SNAP a Good Stock to Buy?
On the Street, the overall sentiment on SNAP is a Hold, with an average SNAP stock price target of $10.20. This implies a 12.71% upside from the current price.
Last Word
Investors will be listening closely tomorrow after trading hours to see if Snap can hold its gains and show signs of a stronger footing in a crowded digital ad market.