Snap (SNAP) saw its share price tumble as OpenAI entered the market with a new short-form video app targeting the same audience as Snap’s Spotlight. This direct competition, combined with negative feedback from an investment firm and news of a class action lawsuit, has put Snap under the investor spotlight.

Snap’s share price has taken a hit in the wake of fresh competition and investor jitters, closing at $8.22 with the year’s momentum fading, as reflected in a -23.5% total shareholder return over the last twelve months. While hopes for future growth remain, recent volatility continues to remind investors that the social media space can shift abruptly with every new tech rival or change in market sentiment.

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With the stock trading at a significant discount to analyst targets, investors are left to consider if Snap is now undervalued or if the current price already reflects all future risks and opportunities.

Most Popular Narrative: 11.4% Undervalued

Snap’s fair value, based on the most widely followed narrative, stands above its last close. This suggests there could be room for rebound if bold growth is achieved. This outlook is based on an optimistic view of key industry and company drivers beyond recent share price fluctuations.

Accelerating innovation in augmented reality (AR), including the upcoming public launch of Specs AR glasses in 2026 and the ongoing expansion of the AR developer ecosystem, positions Snap to benefit from both increased user engagement and the creation of premium advertising and subscription revenue streams. These factors can drive top-line revenue and improve gross margins over time.

Is explosive technology the secret behind this valuation? Notable assumptions have been included regarding Snap’s future margins and the company’s business model shift. Explore which projected advances in advertising and new revenue streams influence this narrative’s fair value.

Result: Fair Value of $9.28 (UNDERVALUED)

However, persistent unprofitability and intensifying competition from established tech giants could still undercut Snap’s path to a meaningful rebound.

Build Your Own Snap Narrative

If you see a different story in the numbers or want to dig deeper into Snap’s outlook, you can quickly craft your own view with just a few clicks, and Do it your way

A great starting point for your Snap research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.

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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.