Snap Inc (NYSE: SNAP), the parent company of Snapchat, has endured a brutal comedown since its 2021 peak, with shares down nearly 90% from their all-time high.
But beneath the rubble lies a social media firm quietly rebuilding its growth engine – and investors might want to take notice.
From cutting-edge advertising technology to rapidly growing user engagement and a rock-bottom valuation, Snap stock is starting to look like a gift worth unwrapping.
Ad-tech and AI: two major tailwinds for Snap stock
Snap’s core business, digital advertising, was hit hard by Apple Inc 2021 privacy changes, which disrupted user tracking and ad targeting.
But Snap didn’t stand still. It rebuilt its ad infrastructure using machine learning, and the results are starting to show.
In Q1 2025, app-install campaigns on Snapchat saw a year-on-year increase of 30% in conversions from Apple devices, signaling the new ad engine is gaining traction.
The company also rolled out an automated bidding system that helps advertisers lower their cost-per-action while boosting return on ad spend.
Early adopters have reportedly seen a 16% boost to returns and a 32% decline in cost-per-action.
Meanwhile, Snap’s Sponsored AI Lenses – augmented reality ads powered by generative AI – are driving deeper engagement and brand interaction.
According to Zacks Equity Research, these immersive formats can boost impressions by up to 45% in a single day, adding to the list of reasons to buy Snap stock at current levels.
Revenue diversification to help SNAP shares in 2025
Investors should note that Snapchat’s user base looks far from saturated in 2025.
The social media app averaged 460 million DAUs this year in Q1 – a record high – helping a great deal in keeping advertisers interested in SNAP.
At the same time, the NYSE listed firm remains fully committed to diversifying its revenue beyond advertising as well, with initiatives like Snapchat+ that now boasts nearly 15 million subscribers and is on a $600 million annualised run rate.
Additionally, Snap Inc is seeing traction with its “My AI” chatbot powered by the Gemini models.
A 55% year-on-year increase in My AI’s daily active users in the first quarter suggests the company’s artificial intelligence investments are resonating well with the users.
Together, these innovations aimed at diversifying beyond traditional ad revenue and building a more resilient business model could unlock significant further upside in SNAP shares moving forward.
Snap stock is trading at a mouthwatering valuation
Perhaps the most compelling reason to consider loading up on Snap stock right now is its valuation.
At its 2021 peak, Snap traded at a sky-high price-to-sales (P/S) ratio of 40.
Today, that figure has collapsed to just 2.5 – near the lowest in the company’s public history.
And that’s despite a 14% revenue growth and a whopping 137% increase in adjusted EBITDA in Q1.
Snap’s gross margins remain healthy, and its operating expenses grew just 2% in the latest quarter.
While the company is still posting GAAP losses, it’s narrowing them significantly.
For long-term investors, this combination of improving fundamentals and depressed valuation could be a rare opportunity.
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