Snap Stock Soars: What Drove the Surge?

Snap's Pop: More Hype Than Substance?

Snap's stock jumped over 22%—a headline that screams turnaround. But let's dissect the numbers before we pop the champagne. Sure, they beat expectations, reporting a Q3 loss of $0.06 per share against an estimated $0.12 loss. Revenue grew 10% year-over-year to $1.5 billion, slightly exceeding the $1.49 billion analysts predicted. And they’re forecasting Q4 sales between $1.68 billion and $1.71 billion, which is also ahead of the curve. Daily active users (DAU) are up 8% to 477 million, edging past their own guidance of 476 million.

But here's where the data demands a closer look. That 10% revenue growth in Q3 2025? It's actually a deceleration from the 15.5% annual growth in Q3 2024. Deceleration, not acceleration, is the trend. Is this a temporary blip, or a sign of a maturing platform struggling to maintain its previous momentum?

Perplexity Partnership: Savior or Short-Term Fix?

The partnership with Perplexity AI (PEAI.PVT) is being touted as a game-changer. Perplexity will pay Snap $400 million starting in early 2026 to appear in the Chat interface for Snapchatters worldwide. Sounds impressive, right? But let's break it down. $400 million over, presumably, several years (the exact duration isn't specified) isn't a massive windfall for a company with a $25 billion market cap. It's a band-aid, not a cure.

I've looked at hundreds of these filings, and this particular partnership announcement feels… staged. It's designed to create buzz, to paint a picture of innovation, but the actual financial impact is less clear. How will this partnership affect user engagement? Will it drive new users to the platform, or simply provide a new revenue stream from existing ones? And what happens when the partnership ends? Will Snap be able to replace that revenue, or will they be back to square one?

The User Growth Mirage

The DAU numbers are positive, no doubt. But let’s consider the context. 477 million daily active users is a huge number, but the growth rate is slowing. The low hanging fruit has been picked. Acquiring new users is becoming increasingly expensive and difficult. And are these users truly engaged, or are they just passively scrolling through content? What's the average time spent on the app per user? What's the click-through rate on ads? These are the metrics that truly matter, and Snap isn't exactly shouting them from the rooftops. Details on these key engagement metrics remain scarce, which always makes me suspicious.

And this is the part of the report that I find genuinely puzzling. If user growth is slowing and engagement metrics are opaque, where is the long-term value creation coming from? Is Snap betting on augmented reality (AR) to drive future growth? Are they planning to launch new features or services that will attract and retain users? Their strategy remains a bit of a black box, which makes it difficult to assess their long-term prospects.

A Sugar Rush, Not a Sustainable Strategy