Trying to decide if Snap belongs in your portfolio? You’re not alone. The stock’s journey this year has kept investors on their toes, with movement that makes you wonder if Wall Street is just waking up to the company’s real potential or bracing for more disruption ahead. In the past week, Snap shares perked up by 2.8%, a refreshing change after a stretch that saw a 3.9% dip over the last 30 days and a sharper slide year-to-date at -29.3%. That long-term chart tells an even grimmer tale, with the stock down 25.8% over one year and an eye-popping 80.5% over the past five years.
What’s fueling these swings? Lately, the company has made headlines for expanding its augmented reality features and securing partnerships with major content creators, which has sparked optimism about user growth and ad revenue potential. There is also a growing sense that Snap could tap into fresh markets or carve out a stronger position in the social space, even as competition bites. For value-focused investors, here is the key figure: Snap scores a 4 out of 6 on major valuation checks, signaling it is undervalued in a majority of the metrics we track.
Before you draw any conclusions, though, it is worth looking under the hood at how we reach that valuation. Let’s break down the different methods analysts use to judge where Snap stands. Later, I’ll share a perspective that can make these scores even more meaningful.
Why Snap is lagging behind its peers
The Discounted Cash Flow (DCF) model estimates Snap’s true value by projecting its future cash flows and then discounting them to account for the time value of money. This approach helps investors understand what the business might be worth today, based on its ability to generate cash down the line.
Currently, Snap’s Free Cash Flow stands at $365 million. Analysts expect this figure to scale steadily over the coming decade, reaching an estimated $2.73 billion by 2035, according to extended projections. Notably, more reliable analyst forecasts are only available for the next five years. After this period, estimates become more speculative. Throughout this time, Snap’s annual free cash flow is expected to grow at a robust rate, supported by its technology initiatives and evolving revenue streams.
Based on these calculations, the model arrives at an intrinsic value of $18.99 per share. With a DCF-implied discount of 58.1%, this suggests Snap’s stock is trading well below what the model considers fair value, making it strongly undervalued according to this method.
Story Continues
Result: UNDERVALUED
SNAP Discounted Cash Flow as at Oct 2025
Our Discounted Cash Flow (DCF) analysis suggests Snap is undervalued by 58.1%. Track this in your watchlist or portfolio, or discover more undervalued stocks.
The Price-to-Sales (P/S) ratio is often a preferred way to value companies like Snap that are not consistently profitable but still have robust revenue. Since earnings can be volatile for high-growth tech businesses, using a sales-based multiple helps provide a clearer view of how the market values each dollar of revenue, regardless of near-term profitability.
Growth prospects, overall risk, and the company’s maturity can all influence whether a given P/S ratio is considered high or low. Investors typically accept higher multiples if a company is growing rapidly, is well positioned in its industry, or if future profits are expected to increase significantly. On the other hand, higher risk or sluggish revenue growth may justify a lower ratio.
Right now, Snap trades at a P/S ratio of 2.38x. For context, the industry average is 1.37x, while other peers are around 3.35x. While this puts Snap below its peer average, it is well above the broader sector. However, the proprietary Fair Ratio calculated by Simply Wall St stands at 2.72x. This Fair Ratio incorporates much more than industry averages or peer multiples. It adjusts for things like Snap’s revenue growth, risk, profit margins, industry trends, and market cap to better reflect its unique situation and future prospects.
Because Snap’s current P/S ratio is just below its Fair Ratio, the market seems to be pricing the shares slightly below what they could be worth based on its fundamentals and outlook.
Result: UNDERVALUED
NYSE:SNAP PS Ratio as at Oct 2025
PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.
Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative ties together your unique view of Snap’s story, turning your expectations for its revenue, margins, or growth into a specific financial forecast and fair value estimate.
With Narratives, you are not bound to a single set of analyst assumptions or numbers. Instead, you can shape your own data-driven investment thesis, whether you believe Snap is on the cusp of a turnaround via global mobile adoption and new AR products, or face challenges from stiff competition and limited profitability.
Simply Wall St’s Community page, used by millions worldwide, makes it easy to create, update, and compare Narratives for any company, including Snap. When major news or earnings break, your Narrative’s forecast and valuation update in real time, helping you spot when the market price differs meaningfully from your own fair value.
For example, some Snap investors are optimistic, forecasting a fair value of $16.00 thanks to rapid AR and revenue growth, while others are cautious, setting a conservative estimate of $7.00 amid ongoing industry challenges. Narratives help you visualize where you stand and give the clarity to act with confidence when opportunity arises.
Do you think there’s more to the story for Snap? Create your own Narrative to let the Community know!
NYSE:SNAP Community Fair Values as at Oct 2025
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include SNAP.
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