Down 88% From Its All-Time High, Here's 1 Big Reason Snap Stock Can Snap Back in 2025
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Snap (SNAP -0. 76%) is the parent company of social media platform Snapchat. In September 2021, its stock hit an all-time high of $83, which represented a whopping 388% gain from...
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July 8, 2025
04:48 AM
The Motley Fool
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Snap (SNAP -0. 76%) is the parent company of social media platform Snapchat
In September 2021, its stock hit an all-time high of $83, which represented a whopping 388% gain from its initial public offering (IPO) price of $17 from a few years earlier
However, Snap stock has since lost 88% of its peak value
The company has struggled with the privacy changes implemented by iPhone maker Apple in 2021, which temporarily muted the effectiveness of its advertising platform
Plus, Snap hasn't expanded as aggressively (organically or through acquisitions) as its main rival, Meta Platforms
Snap's is showing signs of imvement right now, and there's one big reason its stock could bounce back from here
Image source: Getty Images
Why Snap stock lost momentum after 2021 Most people access social media platforms using their smartphones, and the Apple iPhone has an estimated market of 57% in the U
If you used an iPhone prior to 2021, companies Snap could automatically track your activity across other apps and websites to find out what you d and use that information to sell highly targeted advertising slots to es
It was shooting fish in a barrel
But Apple tightened its privacy rules in 2021, forcing app developers Snap to ask for their users' permission before tracking their broader activity
Most people said no, which left social media companies flying blind as they no longer had intricate knowledge of their users' habits
This made it much harder to sell targeted ads to es
Meta, which owns Facebook and Instagram, adapted quickly because it had a lot of first-party data on its users and the scale to build new nology very quickly
Snap was slower to respond but has made significant gress recently
It developed a new advertising engine powered by machine learning (ML), which targets users more effectively
Brands that ran app-install campaigns on Snapchat during the first quarter of 2025 ( March 31) saw a 30% increase in conversions on Apple devices, compared to the year-ago period
Snap is also heavily in augmented reality (AR) to help advertisers der a unique experience to their target audience
For example, es can create "Lenses," which allow users to try on items of clothing virtually using their smartphone cameras
Snap says this is driving an increase in conversions
In other words, AR-based ads make the target customer far more ly to buy a particular duct
The big reason Snap stock can snap back in 2025 Snap's annual revenue soared by a whopping 64% in 2021 as Apple's privacy changes were still in the cess of taking effect, but also because people were spending more time online due to the pandemic
But that annual revenue growth rate crashed to 12% in 2022 and less than 1% in 2023
Some of Snap's innovations appear to be paying off now, however, because the company's revenue came in at a record $5. 4 billion in 2024, which represented accelerated growth of 16%
Revenue also grew by 14% year over year during the first quarter of 2025 and came in at $1. 36 billion, which was the most money the company has ever brought in during the first three months of a year
There's ly momentum building in Snap's, and I think it will continue for one critical reason
At the end of the first quarter of 2025, Snapchat had a record 460 million daily active users, which was up 9% year over year
That number continued to grow even during the company's post-2021 slump, which is a sure sign that users really love the platform
The primary goal of most marketing campaigns is to reach as many potential customers as possible, so Snapchat will remain a lucrative destination for advertisers, as long as it continues to bring new users in the door
The platform now has around 140 million more daily users than it did at the end of 2021, so if the company continues to imve its advertising nology, it could drive a massive increase in revenue in the coming quarters (and years)
Should you buy Snap stock right now
Snap stock is trading at a rock-bottom valuation ing its 88% decline
Its price-to-sales ratio (P/S) is just 2. 8, which is near the cheapest level since it went public in 2017: SNAP PS Ratio data by YCharts
If Snap continues to ve that it has solved the challenges with its advertising platform, investors will have more confidence in the company's ability to der faster revenue growth in the future
This might entice them to pay a higher P/S for the stock, which could drive significant upside from here
There are still many unknowns ahead, so buying Snap stock today might feel taking a leap of faith
But based on its current valuation and the company's operating results over the past year, it might be worth adding it to a diversified portfolio -- even if it's only a small position -- to keep any potential risk in check
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors
Anthony Di Pizio has no position in any of the stocks mentioned
The Motley Fool has positions in and recommends Apple and Meta Platforms
The Motley Fool has a disclosure policy.
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