Since April 2026, Snap has been in a holding pattern, floating around $6.06. The stock also fell short of the S&P 500’s 11.2% gain during that period.
Is now the time to buy SNAP? Or does the price properly account for its business quality and fundamentals? Find out in our full research report, it’s free.
Why Are We Positive on Snap?
Founded by Stanford University students Evan Spiegel, Reggie Brown, and Bobby Murphy, and originally called Picaboo, Snapchat (NYSE: SNAP) is an image centric social media network.
1. EBITDA Margin Reveals a Well-Run Organization
Investors regularly analyze operating income to understand a company’s profitability. Similarly, EBITDA is a common profitability metric for consumer internet companies because it excludes various one-time or non-cash expenses, offering a better perspective of the business’s profit potential.
Snap has been an efficient company over the last two years. It was one of the more profitable businesses in the consumer internet sector, boasting an average EBITDA margin of 13.2%.
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Snap’s EPS grew at 36.4% compounded annual growth rate over the last three years, higher than its 12.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Increasing Free Cash Flow Margin Juices Financials
Free cash flow isn’t a prominently featured metric in company financials and earnings releases, but we think it’s telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
As you can see below, Snap’s margin expanded by 9.3 percentage points over the last few years. This is encouraging because it gives the company more optionality. Snap’s free cash flow margin for the trailing 12 months was 11.1%.
Final Judgment
These are just a few reasons why we think Snap is a high-quality business. With its shares trailing the market in recent months, the stock trades at 8.4× forward EV/EBITDA (or $6.06 per share). Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
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