Dropped by 88% from its record peak, a significant factor suggests a potential rebound for Snap Inc. stock by 2025.
In the ever-evolving world of technology, Snap, the parent company of Snapchat, has been making headlines recently. With a current count of 460 million daily active users, the platform has seen a 9% year-over-year increase, marking a significant milestone at the end of the first quarter of 2025.
However, investing in Snap stock might feel like taking a leap of faith due to the many unknowns ahead. This sentiment is partly due to Apple's tightened privacy rules, implemented in 2021, which required app developers like Snap to ask for user permission before tracking their activity. This change has undoubtedly affected Snap's advertising platform, causing a struggle for the company.
Despite these challenges, Snap's resilience is evident. The company's revenue for 2024 reached a record $5.4 billion, representing accelerated growth of 16%. This impressive figure is a testament to Snap's ability to adapt and innovate, even in the face of adversity.
The year 2021 saw a 64% surge in Snap's annual revenue, but the growth rate decreased to 12% in 2022 and less than 1% in 2023. However, by early 2024, stronger operational performance and progress on key growth drivers led to a rebound in revenue growth. The platform now has around 140 million more daily users than it did at the end of 2021.
Snap's rebound can also be attributed to its strategic investments. The company has been heavily investing in augmented reality to help advertisers deliver a unique experience to their target audience. This focus on innovation has paid off, with brands that ran app-install campaigns on Snapchat during the first quarter of 2025 seeing a 30% increase in conversions on Apple devices, compared to the year-ago period.
Moreover, Snap has developed a new advertising engine powered by machine learning, which targets users more effectively. This advancement in technology could drive a massive increase in revenue in the coming quarters and years, making Snap's current valuation and operating results over the past year worth considering, even as a small position.
The company's operating results over the past year might entice investors to pay a higher P/S for the stock, which could drive significant upside from here. As of now, Snap stock has lost 88% of its peak value, but adding it to a diversified portfolio could help keep any potential risk in check.
In September 2021, Snap's stock hit an all-time high of $83, representing a 388% gain from its initial public offering (IPO) price of $17. If Snap continues to improve its advertising technology, it could potentially drive a return to these heights and beyond.
In conclusion, Snap's recent successes and strategic investments position the company for continued growth. While there are still challenges ahead, the company's resilience and innovative spirit make it an interesting prospect for investors. As always, it's essential to conduct thorough research and consider individual investment goals before making any decisions.
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