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Snapchat (SNAP) has been one of the worst stocks in the market over the last five years. It just hasn’t seemed to be able to get its act together. While young people seem to love the app, SNAP has been unable to monetize its significant userbase (477 million Daily Average Users – Worldwide). But this quarter (4Q25) may represent a turning point.

Average Revenue per User (ARPU) increased 5.2% compared to the year ago period. That’s up from 1.9% in the third quarter and 0.3% in the second quarter when I threw in the towel. But with the stock trading below $6 ahead of earnings this afternoon I bought back in with a small position and also bought a few lotto $7 Feb6 Calls – and I’m sure glad I did.

SNAP makes most of its money in North America and ARPU there increased 11.8% compared to the year ago period. Next most important for SNAP is Europe where ARPU increased an impressive 20.1%. In other words, SNAP seems to finally be monetizing its user base. If it can continue to get more revenue per user, the whole business starts to work and the stock has a lot of upside.

Overall revenue growth was +10% in the fourth quarter and +11% for the full year. Full year Adjusted EBITDA – a measure of profitability – was up 36% to $689 million from $509 million in 2024. That’s not too expensive for a stock with a market cap ~$10 billion. SNAP’s 1Q26 Guidance also looked good.

I see a lot of investors on Twitter whining about SNAP’s large stock based compensation (SBC) expense. (SNAP issued $1 billion in SBC in 2025). But it’s a non-issue. We all know that many tech companies pay a lot of their compensation in stock. Further, the issuance of stock to employees dilutes the share count so that earnings are spread out over a greater number of shares. It’s simply a different way of compensating employees, one that is very common in the Silicon Valley and among tech companies. To imply that issuing a lot of SBC is a form of cheating is nonsense.

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