Moody
Equity Investor, Semiconductor Research
Snap's 16% workforce reduction is very positive because it directly lowers operating costs and, with a delay, stock-based compensation, the bloat that had weighed on the shares. The cut is slightly below the 20% previously modeled; that scenario had a brief SBC spike from vesting acceleration, then SBC falling to $735M by 2029, free cash flow overtaking SBC a year early in 2027 and about $1.1B of owner free cash flow by 2029. Further cost reductions may still come. x.com
Snap is probably not worth owning until it makes AI-enabled layoffs of about 20%, the step its bull case depends on. The consensus that everything at Snap is bad is priced in, and excessive stock compensation is a finite problem: revenue could reach $9.3B by 2029 with stock compensation flat near $1B, and free cash flow overtakes it in 2028. A 20% cut, which Snap has done before and Block's 40% AI-driven cut shows is possible, would pull that to 2027. 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 deserves more than the 6x 2027 EBITDA multiple Wells Fargo still assigns it. Wells Fargo raised its 2027 EBITDA estimate by 11% to $1.78 billion, partly on stronger Snap+ revenue, but kept that valuation multiple unchanged. x.com
Snap is possibly one of the worst investment ideas because its profits are an illusion. Stock-based compensation is 17% of sales, shares outstanding are up 47% since 2017, and free cash flow turns negative after SBC; the $500M buyback just spends shareholder money to offset dilution. Ad revenue grew only 5% in Q4 as TikTok, Reels and Shorts compete, and North American users are falling. An EU child-safety probe risks fines up to 6% of revenue, and age bans loom. Better growth lies elsewhere. … Show more
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 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 not a buy despite bullish takes after CEO Evan Spiegel's annual letter, given zero CEO buys in years, out-of-control stock comp and weak margins. Its FCF margin is 7.4% and net margin 14%, versus Reddit's 33% and 45%. If Snap reached about $9.2B of 2030 revenue at roughly 30% net margins, $1.55 EPS at about 26x would mean a $40 stock versus $5.50 today, but a lot needs to go right. x.com
TeamSpirit's recurring-revenue growth and improving operating margin make its earnings look great. NNARR grew over 30% and ARR is growing in the teens. Management is refocusing on the stock and starting its first buyback beyond purchasing shares sold by the founder; partnerships with Nomura, Workday, SAP and Oracle are starting to inflect. x.com
Snap as a whole trades around a $10 billion valuation, half the $20 billion floated for a stake in its Specs AR unit, so buying the entire company effectively gets the ad business for free. x.com
Snap's new AR glasses, priced at $2,195, are a poor sign for shareholders. x.com
Snowflake is too expensive at 55x FY2027 free cash flow because stock-based compensation dwarfs that cash flow. FY2027 Q1 showed $265.5M of non-GAAP adjusted FCF against $433.7M of SBC, or 163% of FCF; trailing-12-month FCF is $1.2B versus $1.6B of SBC. That much dilution for 30% revenue growth makes it uninvestable when better stocks exist: Reddit's SBC is 21% of FCF, it grows twice as fast, and its non-GAAP net margin is 42% versus Snowflake's 10.6%. x.com x.com x.com x.com
