Snap (SNAP) Stock Forecast & Price Target

Snap Inc. demonstrated a strong financial performance in its recent quarterly report, with sales rising 9.8% year-over-year to $1,507 million, surpassing the high end of guidance. Notably, the global average revenue per user (ARPU) improved to $3.16, reflecting a 2% year-over-year increase, while the European ARPU surged by 19% year-over-year, indicating robust growth in key markets. Additionally, the company's expansion of premium subscription services, evidenced by the addition of 1 million subscribers to Snapchat+, signals positive traction in monetization efforts and enhances the outlook for future revenue growth.

Snap's stock faces a negative outlook primarily due to declining average revenue per user (ARPU), which fell to $2.77 in the third quarter, representing a year-over-year decrease of 2%. Additionally, the company's guidance for stock-based compensation (SBC) was lowered, indicating expectations for reduced revenue growth in the upcoming periods, with a projected increase of only 4-7% year-over-year, compared to previous estimates. Furthermore, Snap is experiencing a concerning decline in daily active users (DAUs) in North America—its most profitable region—attributed to increased competition from short-form video platforms, which could hinder future user engagement and growth.