Down 94% From Its Record High, Can Snap Stock Snap Back in 2026?

Core Viewpoint - Snap is innovating its advertising platform and diversifying revenue streams, but faces challenges in user growth and profitability recovery [1][15]. Advertising Performance - Snap's advertising platform is improving, with the launch of Sponsored Snaps leading to a 7% increase in click-through rates and a 17% increase in click-through purchases in Q4 2025 [6]. - The number of active advertisers on Snapchat increased by 28% in Q4 2025, driven by improved ad performance [9]. Financial Performance - Snap generated $5.9 billion in revenue in 2025, an 11% increase from the previous year [9]. - The company reported a GAAP loss of $460.5 million, a 34% reduction from a $697.9 million loss in 2024, while adjusted EBITDA rose by 36% to $689.5 million [10]. User Engagement - Snapchat averaged 474 million daily active users in Q4 2025, a decline from 477 million in Q3 2025, marking the first sequential decline since Q2 2018 [11]. - Management's focus on profitability led to reduced spending on user acquisition, contributing to the decline in daily active users [12]. Subscription Services - Snap is diversifying revenue through subscription products like Snapchat+, which had 24 million members at the end of 2025, a 71% increase year-over-year [8]. Stock Valuation - Snap's stock has declined 94% from its 2021 peak, resulting in a price-to-sales ratio of 1.4, near its lowest since going public in 2017 [13]. - Despite concerns over modest revenue growth and ongoing losses, the improvements in advertising and subscription services present potential positives for future stock performance [15].