Buy, Sell, Or Hold SNAP Stock At $9?

Core Insights - Snap's stock rose 7% on June 27, 2025, due to positive comments on its direct response advertising, potentially allowing it to exceed earnings estimates for the quarter [2] - Despite the recent increase, Snap's stock is down 20% year-to-date, currently valued around $9, presenting a buying opportunity [2] - Snap's financial health shows moderate operating performance, with a focus on growth, profitability, financial stability, and downturn resilience [3] Valuation - Snap has a price-to-sales (P/S) ratio of 2.6, which is lower than the S&P 500's ratio of 3.1, indicating it is relatively inexpensive compared to the market [4] Revenue Growth - Snap's revenues have grown at an average rate of 9.4% over the past three years, outperforming the S&P 500's growth of 5.5% [7] - In the last 12 months, Snap's revenues increased by 16.4%, from $4.6 billion to $5.4 billion, compared to a 5.5% growth for the S&P 500 [7] - Quarterly revenues rose 14.4% to $1.6 billion from $1.4 billion year-over-year, again outperforming the S&P 500's 4.8% increase [7] Profitability - Snap's operating income over the last four quarters was -$787 million, resulting in an operating margin of -14.7%, which is significantly lower than most companies in the Trefis coverage universe [6][12] - The company's net income for the last four quarters was -$698 million, reflecting a net income margin of -13.0%, compared to 11.6% for the S&P 500 [12] Financial Stability - Snap's balance sheet appears robust, with total assets of $7.6 billion, including $3.2 billion in cash and cash equivalents, leading to a strong cash-to-assets ratio of 42.5% [8][12] - The company's debt stands at $4.2 billion, resulting in a debt-to-equity ratio of 30.0%, which is moderate compared to the S&P 500's 19.4% [12] Downturn Resilience - Snap's stock has underperformed the S&P 500 during recent downturns, indicating weak resilience in challenging market conditions [9][13] - The stock has experienced significant declines in the past, including a 90.7% drop from its peak in September 2021 to October 2022, compared to a 25.4% decline for the S&P 500 [13]