SNAP Investment Thesis Analysis: Reddit YOLO Bet vs Market Reality

This analysis examines a Reddit investment thesis posted on November 15, 2025, advocating a speculative $50,000 position in Snap Inc. (SNAP) with a price target of $35-40 within 1-2 years [1]. The thesis centers on three catalysts: a Perplexity AI partnership, paid Memories storage plans, and an undervalued user base. Current market data shows SNAP trading at $8.57 [0], representing a potential upside of 308-367% to achieve the Reddit target.

: Snap announced a landmark $400 million partnership on November 5, 2025, integrating Perplexity’s conversational search into Snapchat’s Chat interface [2][3]. The deal triggered a 16% premarket surge [3], but revenue recognition isn’t expected until 2026 [4]. This represents Snap’s first major external AI integration, positioning the company in the competitive AI assistant market alongside Meta and Google.

: New paid storage tiers launched in Q3 2025, ranging from $1.99/month for 100GB to $15.99/month for 5TB [5][6]. This diversification beyond advertising shows promise, with “Other Revenue” (primarily Snapchat+ subscriptions) already growing 54% YoY to $190 million [4].

Q3 2025 results show meaningful improvement:

• Revenue: +10% YoY to $1.51 billion [4]
• Net loss: Narrowed to $104 million from $153 million YoY [4]
• Adjusted EBITDA: +38% to $182 million [4]
• Daily active users: 477 million (+8% YoY) [4]

However, key profitability metrics remain negative: P/E ratio of -29.28x, ROE of -21.93%, and net profit margin of -8.60% [0]. The analyst consensus remains cautious with a “HOLD” rating and price targets ranging from $7.00-$9.00 [0].

The Reddit author’s concern about CEO Evan Spiegel’s “absolute control” is substantiated by Snap’s unusual governance structure. The company went public with non-voting stock, giving public shareholders no voting rights while Spiegel and co-founder Robert Murphy maintain complete control through super-voting shares [7]. This structure creates significant agency problems, making investors “hostage to the plans of CEO Evan Spiegel” [7].

A critical disconnect exists between the optimistic price target and catalyst timing. The Perplexity partnership doesn’t launch until “early 2026” [4], creating an execution gap of 3-6 months minimum. Memories monetization potential remains unquantified, with no public data on adoption rates or revenue projections.

The Reddit thesis targets $35-40, representing a dramatic multiple of current analyst expectations [0]. This divergence suggests either significant market mispricing or overoptimistic speculation. The stock’s recent 21.73% gain over 60 days [0] may already reflect some optimism about the AI partnership.

[7]. The complete lack of voting rights for public shareholders eliminates traditional corporate governance checks. Additionally, continued profitability challenges despite improving metrics [0], competitive pressure from Meta’s AI investments and TikTok’s growth, and potential dilution concerns (though partially offset by a $500 million repurchase program) [4] present significant headwinds.

The AI partnership represents a genuine strategic pivot toward diversification beyond advertising. Strong balance sheet with $3.0 billion in cash [4] provides execution flexibility. Growing user base (477 million DAUs) [4] and improving operational metrics suggest the turnaround narrative has merit, though timing remains uncertain.

• Q4 2025 guidance on AI integration progress and Memories adoption
• User engagement metrics to assess AI feature impact
• Competitive response from Meta and Google
• Regulatory environment changes affecting digital advertising

The Reddit investment thesis highlights legitimate strategic initiatives but appears to underestimate execution challenges and overstate near-term upside potential. The $35-40 target requires extraordinary multiple expansion given current analyst expectations [0]. While the Perplexity partnership and Memories monetization represent positive steps toward diversification, the delayed timeline for key catalysts and unique governance risks warrant caution.

Current market data shows improving operational metrics but persistent profitability challenges [0]. The path to sustainable profitability remains unclear, and investors should maintain realistic expectations about timing and magnitude of financial impact from new initiatives.

- Snap’s unique structure with non-voting public shares creates significant agency problems that traditional investors don’t face with other companies [7].