Snap Inc. (SNAP): A Bull Case Theory

We came across a bullish thesis on Snap Inc. on Investment Ideas by Antonio’s Substack by Antonio Linares. In this article, we will summarize the bulls’ thesis on SNAP. Snap Inc.'s share was trading at $9.88 as of July 21^st. SNAP’s forward P/E was 40.32 according to Yahoo Finance.

Snap Inc. (SNAP) has been largely dismissed by the market following an 87%+ decline from its late-2021 highs, yet its fundamentals suggest an overlooked opportunity. Daily active users (DAUs) have risen from ~375M in Q4 2022 to 460M in Q1 2025, placing Snapchat among the world’s top social media platforms with nearly 900M monthly active users (MAUs).

Despite revenue per DAU declining from $12.2 to $12.02 due to expansion in lower-ARPU emerging markets, monetization initiatives, notably Snapchat+, have shown strong traction, reaching a $600M annual revenue run rate in Q1 2025, up 75% YoY. Management’s operational focus is evident in rising free cash flow per share since early 2024, driven by leaner operations, improving advertising efficacy, and diversifying revenue streams.

Advertiser growth is robust, with total advertisers up 60% YoY, supported by Snap Promote and a push to expand direct-response advertising. Meanwhile, My AI, Snap’s AI-powered in-app assistant, has seen rapid adoption, with over 200M users engaging within months of launch, reflecting Snap’s capacity to innovate. The platform’s identity—anchored in connecting real-world friends—differentiates it from Meta’s virtual ecosystems, offering underappreciated engagement optionality. While total debt has exceeded cash since 2022, growing operating cash flow mitigates balance sheet risk.

With Snap trading at just 2.7x sales, its scale and improving financial profile contrast starkly with peers like Spotify, valued 9x higher with similar network dynamics. Execution on revenue per user, especially via subscriptions and AR commerce, could drive meaningful upside, with current pessimism providing a favorable risk/reward setup.

Previously, we covered a bullish thesis on Snap Inc. (SNAP) by LongYield in May 2025, highlighting DAU growth, Snapchat+’s 75% YoY revenue surge, and stronger profitability. The stock has appreciated about 26% since then as operational improvements began to reflect in results. The thesis still stands with monetization and user growth intact. Antonio Linares shares a similar view but emphasizes undervaluation amid improving fundamentals.

Snap Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 39 hedge fund portfolios held SNAP at the end of the first quarter which was 44 in the previous quarter. While we acknowledge the potential of SNAP as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None.