Snap (SNAP) Stock Forecast & Price Target

Snap's financial outlook is bolstered by a year-over-year increase in global average revenue per user (ARPU), which rose to $3.16, along with notable growth in its monthly active users (MAUs), reaching 943 million in the third quarter compared to 932 million in the previous quarter. The company's regional performance also highlights strength, with European ARPU increasing by 19% year-over-year, and robust growth in advertising revenue driven by small and medium-sized business (SMB) strength in North America, which saw a 25% revenue increase year-over-year in the third quarter. Additionally, the effectiveness of Snap's content recommendation model has led to a significant rise in engagement, as evidenced by a 300% year-over-year increase in the share of total Spotlight views from content posted in the last 24 hours in the U.S.

Snap is experiencing a concerning decline in key financial metrics, including a projected decrease in average revenue per user (ARPU) to $2.77 for 3Q, which reflects a year-over-year decline of 2%. The company's outlook for stock-based compensation (SBC) was also lowered, indicating potential financial strain with revised growth expectations now set between 4-7% year-over-year, down from earlier projections. Additionally, Snap is anticipating a sequential decline of 3 million daily active users (DAUs) in 4Q, primarily attributed to competition from short-form video platforms, regulatory challenges, and diminished user engagement, raising further concerns about revenue stability and growth.