Benchmark has reiterated a Hold rating on Snap Inc. following the company’s fourth-quarter results, which delivered a mix of positive and negative signals for investors. The shares are trading at $5.12, close to a 52-week low, after tumbling more than 26% over the past week.
Market indicators from InvestingPro cited in the company commentary suggest Snap may be trading below its Fair Value and that its Relative Strength Index (RSI) is consistent with oversold territory.
On the financial front, Snap recorded its first GAAP profit in the quarter. That milestone came after management implemented reductions in community growth marketing and infrastructure spending. However, the company’s profitability picture remains nuanced: InvestingPro data shows Snap has not been profitable over the trailing twelve months and reports a negative return on equity of -19% for that period.
Operationally, the fourth quarter revealed a notable deterioration in daily active user (DAU) metrics. North America lost 3.3 million DAUs quarter-over-quarter, the largest sequential decline on record for the region. At the same time, North American average revenue per user (ARPU) growth accelerated, helping revenue to hold roughly flat on a two-year stacked basis.
Revenue dynamics in the quarter were uneven. Demand was mainly driven by direct response advertising and small-to-medium business (SMB) clients, while spending from large brand advertisers in North America remained weak. Snap’s leadership has signaled a series of responses to these dynamics, including new sales leadership and a push to sustain ad revenue momentum via Sponsored Snaps and Promoted Places. Management has also reiterated that continued progress with SMBs is a core strategic priority and described SMB progression as the company’s "North Star" for 2026.
Snap’s balance sheet metrics show moderate leverage and significant short-term liquidity. The company reported a current ratio of 3.56, indicating liquid assets comfortably exceed short-term liabilities.
On the subscription front, Snap posted meaningful growth. Snapchat+ subscribers rose by roughly 7 million quarter-over-quarter, a gain credited in part to the September 2025 roll-out of new offerings including Memories storage. Benchmark cautioned that when excluding estimated North America Snapchat+ revenue, the region’s ARPU growth would be only 2.3% year-over-year rather than the headline 10.1% figure reported by the company.
Looking ahead, consensus analyst projections cited from InvestingPro call for Snap to return to profitability on a calendar basis this year, with an EPS forecast of $0.44 for fiscal year 2026 and revenue growth of 13%.
Recent analyst activity and market reaction
Snap reported Q4 2025 earnings that beat expectations on both EPS and revenue, yet the stock fell in after-hours trading following the release. On the analyst front, Stifel upgraded the rating on Snap from Sell to Hold while keeping a price target of $5.50, a move that followed a substantial decline in the stock earlier in the year.
Separately, B. Riley upgraded Snap from Neutral to Buy, citing progress in growth initiatives tied to premium subscriptions such as Snapchat+, Lens+, and Memories Storage Plans. By contrast, Citizens reiterated a Market Perform rating and flagged concerns about user engagement, noting a 4 million decline in North American daily active users quarter-over-quarter and attributing some of the pressure to competitive dynamics from short-form video platforms.
These disparate analyst views underscore the mixed sentiment around Snap’s trajectory — the company has posted sharper near-term cost discipline and subscription gains, but continues to face challenges in user engagement and large-brand ad demand.
What this means for markets
- Snap’s results and guidance are likely to remain a focal point for investors monitoring advertising demand and subscription monetization trends in the social media sector.
- Advertiser mix and user engagement trends will be particularly relevant to the digital advertising market and to firms focused on consumer internet monetization.
- Subscription growth and product-led revenue diversification will be watched as indicators of Snap’s ability to stabilize cash flows amid cyclical ad spending weakness.