Prepared Remarks
Equity Investor, Macro Commentary
Snap's Specs project makes the stock uninvestable: it has no product-market fit, will burn money, will never commercialize at any ROI and should be shut down. Google Glass was discontinued, Apple's Vision Pro is a niche money-loser despite better tech, Meta's smart glasses sell for 75% less and still lose money, and Chinese AI glasses cost a fraction. The core business is fine but faces World Cup comps next year and a consumer headwind this year, leaving Snap a knife fight over ad checks. x.com x.com x.com x.com x.com x.com
Snap's core business is priced like a cyclical commodity company, with its Specs AR glasses thrown in nearly free. Revenue grew from $4.6 billion in 2023 to $5.9 billion in 2025 and free cash flow from $35 million to $437 million, and management aims to keep the diluted share count stable from 2027. Valuing Specs at about $1 billion leaves core Snap at roughly 7.3x trailing and 5.1x 2027 EV/EBITDA. Better-than-feared Specs teasers and Meta's AR push make the setup asymmetric. x.com
Snap's Spectacles cannot deliver meaningful commercial value within five years, making a funding partner essential to avoid years of cash burn. At best, they are a prototype, with zero chance of profitability in the next couple of years; the glasses will never sell at the scale needed to make a difference. Without a partner, Snap stock is dead money. Even so, Snap remains a good asymmetric bet on Evan Spiegel changing course, with little downside from here if he does not. x.com x.com x.com x.com
Snap is undervalued, but management burning $4B+ on Specs is the biggest problem. At $2,000+ a pair, Specs are unlikely to go mass market: even 20M pairs, $40B of revenue and $10B of profit would be only a 150% ROI over 12 years, with under 1% odds of happening. Most shareholders would rather see $12-15B of revenue at 40% EBITDA margins with fewer employees and less dilution; Meta built a $1 trillion company on apps before spending on hardware. x.com x.com x.com x.com
Snap's Specs is the most misunderstood and undervalued part of the business. Snap has spent years building AR hardware and software and an ecosystem around them, which would be very difficult to replicate. x.com
Snap's Specs and AI platform are drawing heavyweight partners: Nvidia, Salesforce and Amazon teamed up with Snap for Snap Intelligence and Enterprise. Gen 1 Specs suit early business adoption, but consumer adoption hinges on comfort and style, so the next generation must shrink the frame and move hardware into a small pod off the glasses, as Meta got right. Nobody refused a Walkman or iPod because of a wire. x.com x.com
Snap's turnaround looks over because Spectacles are not being scrapped. Dropping Spectacles was a big part of Irenic's turnaround plan, yet Evan Spiegel doubled down publicly, and the new $2,200 specs are embarrassing. x.com
Snap looks very interesting as a long-term buy at a forward P/E of 6 and a PEG of 0.21. Growth is expected near 10% for the next two years, with positive earnings expected from next year. x.com
Snap is slowly turning into a subscription software company, with Snapchat+ revenue up 87% in Q1 to $285 million, nearly 19% of total revenue versus 11% a year ago and now a $1 billion annual run rate. The price target is $14. x.com x.com
Snap is a weak company because of CEO Evan Spiegel's product judgment. Its new Specs AR glasses, shown publicly for the first time, look so unappealing that they may be the first product ever to launch and not sell a single unit. x.com x.com
Snap should work because CEO Evan Spiegel needs access to capital to get where he wants to go, which requires shareholder alignment; the plan does not work without either. A replier adds that getting Specs to market requires a high stock price. x.com