Snap shares experienced a sharp decline, plummeting 19% after the company released its Q2 2025 earnings report. The selloff followed disappointing results, as Snap missed Wall Street expectations on revenue, Average Revenue Per User (ARPU), and earnings before interest, taxes, depreciation, and amortization (EBITDA). A technical glitch in the company’s advertising platform further contributed to the revenue shortfall, compounding investor concerns about Snap’s ability to compete in the digital ad market.

The Q2 numbers highlighted moderate overall operating and financial health for Snap, but this wasn’t enough to reassure investors. At its current trading price of around $8 per share, Snap’s valuation remains elevated compared to broader market benchmarks. Its price-to-sales ratio sits at 2.4, which, although lower than the S&P 500’s average of 3.0, is still high given Snap’s growth rates. More notably, the company’s price-to-free cash flow ratio is 33 versus the S&P 500’s 20.5, underscoring concerns about its premium valuation relative to its financial performance.

Snap’s struggles in improving profitability and demonstrating resilience during downturns have made its stock less appealing to value-focused investors. Despite boasting a large user base and brand recognition, recurring technical issues on its ad platform and increasing competition from other social media giants have raised doubts over its long-term growth prospects.

For investors seeking stability or robust returns, Snap’s current setup may not present a compelling opportunity. Broader market portfolios, particularly those comprising high-quality stocks, have outperformed Snap in both growth and risk-adjusted returns. As Snap works to resolve its ad platform issues and restore investor confidence, it remains a company under pressure, marked by cautious optimism at best.