Snap Inc. (SNAP): A Bull Case Theory

Core Thesis - Snap Inc. is viewed as an underappreciated social media platform with significant growth potential, particularly in augmented reality (AR) and monetization strategies [2][3][6] User Engagement - As of Q2 2025, Snap has 932 million monthly active users (MAUs) and over 350 million daily augmented reality (AR) users, indicating strong user engagement [2] - Snapchat+ subscribers increased from 15 million to 16 million quarter-over-quarter, while games engagement rose 40% year-over-year to 175 million MAUs [2] - Spotlight usage surged 23% year-over-year, accounting for nearly half of all time spent on the platform, and video chat time increased by 30% year-over-year [2] Financial Performance - Free cash flow per share has risen sharply, with an annual revenue run-rate from Snapchat+ reaching $700 million [3] - Snap is trading at just over 2 times sales, suggesting that the market has undervalued the company, creating an asymmetric investment opportunity [3] Augmented Reality Strategy - Snap's long-term strategy is centered around its AR-first philosophy, with over $3 billion invested in building a vertically integrated AR platform [4] - The company offers unique developer tools such as Easy Lens, real-time transcription APIs, and 3D object generation to enhance its AR capabilities [4] Advertising and Monetization - Early monetization improvements are evident with Sponsored Snaps, which have shown stronger engagement and conversion rates compared to traditional ad formats [5] - A Q2 2025 ad platform error caused a temporary 25% stock drop, but the issue has been resolved, and fundamentals are strengthening [6] Market Sentiment - Despite mixed perceptions of leadership, Snap's fundamentals are improving, with resilient engagement and rising monetization [6] - The stock price has appreciated approximately 8.9% since previous bullish coverage, reinforcing the positive outlook on Snap's fundamentals [7]