Can Snapchat’s Parent SNAP Break Its Losing Streak and Finally Make Money?

According to Main Street Data, Snap’s regular progressive users (DAUs) reached 453 cardinal successful Q4 2024, up from 414 cardinal successful the aforesaid play past year. However, the year-over-year maturation complaint has slowed significantly, dropping from 15% successful Q1 2023 to conscionable 9% successful Q4 2024. This deceleration suggests that portion Snap continues to turn its idiosyncratic base, the gait of enlargement is slowing, which could airs challenges for aboriginal gross maturation and marketplace share.

Moreover, Snap reported an mean gross per idiosyncratic (ARPU) of $9.73 successful Q4 2024, successful the North American region, a humble summation from $8.96 successful Q4 2023.

This emergence successful ARPU signals the company’s quality to make much gross from its existing idiosyncratic base, apt done a higher measurement of ads. However, the situation is ensuring that an accrued advertisement measurement doesn’t negatively impact idiosyncratic experience, which could yet pb to a diminution successful engagement oregon idiosyncratic retention.

On the different hand, the institution is actively moving to trim its operational expenses—likely by tightening budgets successful areas specified arsenic staffing, technology, and marketing. As shown successful the graph below, Snap’s operating costs person declined importantly arsenic a percent of gross successful 2024. For example, astatine the extremity of Q1 2023, income and selling expenses accounted for astir 23% of full revenue. By Q4 2024, that fig had dropped to 15.9%, indicating stronger outgo ratio and improved nett potential.

Snap’s figures amusement a institution making meaningful strides toward profitability, including boosting revenue, improving ARPU successful cardinal regions similar North America, and cutting operational expenses significantly. However, slowing idiosyncratic maturation raises questions astir semipermanent momentum. As a result, analysts besides support a neutral stance connected SNAP stock.

According to TipRanks, Wall Street has a Hold statement standing on SNAP stock, based connected 24 Holds, six Buys, and 1 Sell assigned successful the past 3 months. The average Snap banal terms target of $12.15 implies a 52% upside potential.