Snap stock soared 23.84% on Tuesday, marking one of their strongest single-day gains in years. The surge came after the company reported better-than-expected third-quarter results and announced a major AI partnership with Perplexity.
But after the initial excitement, the stock slid again in after-hours trading, leaving investors questioning whether the momentum can hold.
Key Takeaways Snap Stock
- Snap’s Q3 revenue rose 10% year over year to $1.51 billion, beating forecasts by $20 million.
- Daily active users climbed to 477 million, an 8% annual increase.
- The company’s net loss narrowed to $104 million from $153 million last year.
- Snap signed a $400 million AI deal with Perplexity AI, integrating its search technology into Snapchat.
- Despite strong results, shares dropped in after-hours trading on cautious Q4 guidance.
- Snap also approved a $500 million stock buyback program to support share value.
Snap’s Q3 Results Show Real Progress
Snap delivered results that impressed Wall Street. Revenue reached $1.51 billion, up 10% from last year, and beat analyst expectations by $20 million. Daily active users rose to 477 million, showing the platform’s continued global reach.
Subscription service Snapchat+ generated nearly $200 million annually, while the company’s net loss fell to $104 million, improving from $153 million a year ago.
Importantly, Snap produced $146 million in operating cash flow and $93 million in free cash flow, signaling stronger fundamentals. CEO Evan Spiegel said the company is “helping advertisers achieve better results while keeping the community engaged.”
The $400 Million AI Partnership with Perplexity
The most discussed announcement was Snap’s $400 million partnership with Perplexity AI. Starting in early 2026, Perplexity’s search assistant will be integrated into Snapchat chats, allowing users to ask questions directly inside the app.
Deal Highlights:
- Perplexity will pay $400 million to Snap in cash and equity.
- It will receive prime placement within the chat inbox.
- Snap will not run ads on Perplexity’s answers but expects the integration to boost user engagement.
Spiegel described this as “a first step in building Snapchat into an AI-powered platform for Gen Z.” The announcement quickly gained traction on social media, with investors calling it “Snap’s entry into the AI era.”
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Why Snap Stock Fell After Hours
Despite a 24% surge during the day, Snap’s stock dropped to $7.30 in after-hours trading. The decline reflected profit-taking and concerns about upcoming challenges.
| Concern | What Snap Said | Why It Matters |
|---|---|---|
| Q4 Guidance | $1.68B–$1.71B revenue (8–10% growth) | Growth expected but not exceptional |
| North America Ads | Remains a “primary headwind” | Major advertisers still cautious |
| New Laws | Australia’s under-16 ban begins next month | Could reduce daily users |
| Age Checks | Apple and Google adding verification | May cut under-13 users |
Snap warned that stricter age-verification laws could cause a short-term dip in daily users during Q4.
Snap Stock: Buyback and Valuation Outlook
The board approved a $500 million share buyback, signaling confidence in Snap’s long-term outlook. The company plans to use part of its $3 billion cash reserve to offset employee stock awards and support the stock price.
When compared to competitors, Snap still trades at a notable discount:
| Company | Market Cap | P/S Ratio | YTD Performance |
|---|---|---|---|
| Snap | ~$15B | ~3.2x | -40% |
| Meta | ~$1.4T | ~9x | +55% |
| ~$23B | ~8x | -12% |
Analysts have set an average price target of $9.42, with bullish estimates above $14 if AI and AR initiatives succeed.
Snap Stock Outlook: Three Bets for 2026
Snap’s growth plan centers on three core initiatives:
- Perplexity AI integration, turning Snapchat into an in-app search tool.
- Launch of next-generation AR glasses (Spectacles) in 2026.
- Expanding Snapchat+, now with over 16 million subscribers and new features like custom wallpapers and extra storage.
Internal data shows that users who personalize their app have 10% higher retention rates, reinforcing Snap’s focus on community engagement.
Snap Stock Bottom Line
Snap remains a volatile stock down 40% year-to-date despite recent gains. The company’s strong Q3 results, AI partnerships, and steady subscription growth offer promise, but regulatory pressures and ad weakness persist.
For risk-tolerant investors, Snap may be an appealing turnaround story. For cautious ones, waiting for stabilization could be wiser. Either way, Snap’s message to the market is clear: it’s not done fighting for relevance.
