SNAP, Snap Inc.
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Read top to bottom, the owner's questions in the order an owner asks them: what the business is, whether the record holds, whether it survives and is any good, and what you would be paying. New to the questions? Start with the Method.
The business in brief
read the 10-K →What this business is and what moves its needle, drawn from its own SEC filings. The lens to bring to the numbers below, not the answer.
- What it is
- Revenue is Advertising Revenue (87%) and Other Revenue (13%).
- Situation
- Unprofitable growth. no operating profit yet, judge it on revenue growth, gross-margin trajectory, cash burn and runway, never on an earnings multiple. Distress / turnaround. thin interest coverage or cash-burning operations against real debt, the first questions are liquidity and the maturity wall, not growth.
- What moves the needle
- Retention and the cost of growth. What decides it: whether customers expand rather than churn, how much of revenue is spent winning the next one, and whether software's gross margin holds as it scales. On its own account, the filing leans hardest on pricing power & competition, set against the numbers in what the filing emphasizes, below.
- Is it a good business?
- Return on capital has rarely cleared the cost of capital (median −30%, above 15% in 0 of 10 years). Owner earnings, the cash-based check, have been thin too. This is price-taker territory, where the balance sheet and the cycle matter more than any multiple; the 10-K is where you look.
No model wrote a word of this. Every line is arithmetic on the company's filings, shown in full in the sections below; the judgment is yours.
Where the money comes from
read the 10-K →Advertising Revenue is 87% of revenue, so this is largely a single-line business.
- Advertising Revenue87%$5.2B
- Other Revenue13%$745M
From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.
The record, 2016–2025
realized figures from each filing, no estimates| 2016’16 | 2017’17 | 2018’18 | 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | TTMTTMMar 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| RevenueRevenue | $404M | $825M | $1.2B | $1.7B | $2.5B | $4.1B | $4.6B | $4.6B | $5.4B | $5.9B | $6.1B |
| Gross marginGross mgn | 86% | 88% | 90% | 90% | 87% | 84% | 85% | 85% | 54% | 55% | 56% |
| Operating marginOp. mgn | −128.7% | −422.5% | −107.5% | −64.3% | −34.4% | −17.1% | −30.3% | −30.4% | −14.7% | −9.0% | −6.8% |
| Net incomeNet inc. | ($515M) | ($3.4B) | ($1.3B) | ($1.0B) | ($945M) | ($488M) | ($1.4B) | ($1.3B) | ($698M) | ($460M) | ($410M) |
| EPS (diluted)EPS | $-0.44 | $-2.95 | $-0.97 | $-0.75 | $-0.65 | $-0.31 | $-0.89 | $-0.82 | $-0.42 | $-0.27 | $-0.24 |
| Owner earningsOwner earn. | ($678M) | ($819M) | ($810M) | ($341M) | ($225M) | $223M | $55M | $35M | $219M | $437M | $609M |
| Owner earnings marginOE mgn | −167.5% | −99.3% | −68.6% | −19.9% | −9.0% | 5.4% | 1.2% | 0.8% | 4.1% | 7.4% | 10.0% |
| ROICROIC | -30% | -104% | -52% | -50% | -38% | -14% | -22% | -25% | -12% | -9% | -7% |
| Cash & investmentsCash+inv | $987M | $2.0B | $1.3B | $2.1B | $2.5B | $3.7B | $3.9B | $3.5B | $3.4B | $2.9B | $2.8B |
| Net debt / (cash)Net debt | ($987M) | ($2.0B) | ($1.3B) | ($2.1B) | ($2.5B) | ($1.4B) | ($197M) | $205M | $231M | $549M | $666M |
| Book value / shareBVPS | $1.30 | $2.57 | $1.78 | $1.64 | $1.60 | $2.43 | $1.60 | $1.50 | $1.48 | $1.35 | $1.24 |
Owner’s Scorecard
Will it survive?
- Can it pay its interest? -4.4×Does not cover its interestOperating income ($532M) ÷ interest expense $122M
A full year of operating profit didn't cover the interest bill. This is the zombie zone: the business depends on refinancing, asset sales, or forbearance to service its debt.
- Debt against an operating lossTotal debt $3.5B · operating income ($532M)
There's debt but no operating profit to measure it against, understand that combination before anything else about the company.
- Debt, net of cash $549MNet debtCash $1.0B + ST investments $1.9B − debt $3.5B
Netting $2.9B of cash and short-term investments against $3.5B of debt leaves $549M owed. Net debt is the leverage figure that matters; the gross ratio above ignores the cash already set against it. Strategic or illiquid investments aren't counted here.
- TightDSO 84 + DIO 0 − DPO 30 days
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash. (Little or no inventory, a services / asset-light model, so the inventory leg is ~0.)
Is it a good business?
- Below averageNOPAT ($420M) ÷ invested capital $4.7B (debt + equity − cash)
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
- SolidOwner Earnings $437M = operating cash $656M − capex $219M
What an owner could take out without starving the business. That's 7% of revenue. Treating stock comp as the real expense it is (less $1.0B of SBC) leaves ($580M). Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).
- Loss, but cash-generativeNet income ($460M) · cash from operations $656M
The company reported a net loss, so a conversion ratio isn't meaningful. What matters then is whether operations still threw off cash, here, they did.
How is the cash used?
- Returns most of itDividends + buybacks $751M ÷ Owner Earnings $437M
Of $437M Owner Earnings, $751M (172%) went back to shareholders, $0 dividends, $751M buybacks. But the buybacks barely exceed stock issued to employees ($1.0B SBC), net of dilution, little was truly returned. Returning most of it signals a mature cash machine; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
- Investing or harvesting? 1.34×ExpandingCapex $219M ÷ depreciation $164M
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.
Durability & moat, 2016–2025
A moat is a high return that doesn’t fade, reinvested at high returns. Here is what the record says, judgments, not another chart of the numbers.
- Profitable years 0 of 10
Lost money in 10 year(s), look at what happened there before trusting the average.
- Return on capital ≥ 15% 0 of 5 yrs
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
- Operating margin −129% (FY2016) → −9% (FY2025)
Margins widened over the record, pricing power intact or improving.
- Reinvestment, incremental ROIC returns capital
The capital base barely grew: this business returns cash through dividends and buybacks rather than reinvesting. Judge it on the cash returned, not on compounding.
- Worst year 2017 · −422.5% op. margin
Operations went underwater in 2017, understand why before trusting the good years.
Solvent is not the same as cheap; growing is not the same as good. These are vital signs, not a verdict, the judgment is yours, and the filing is one click away.
Management & pay
Two questions Buffett actually asks about pay: is stock compensation, a real expense, whatever the income statement pretends, quietly large, and is the top wildly out of line with the floor. He's no populist about it; he just wants pay that's rational and earned, and comp committees that aren't lapdogs.
- Stock-based compensation$1.0B
The slice of the business handed to employees in shares this year, 17% of revenue. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. And note the trap, the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
Graham’s defensive-investor test
2 of 5 metGraham gave the defensive investor seven numerical criteria in The Intelligent Investor. Here they are, run mechanically on the filings, his framework, not our verdict. Meeting them is a floor of safety, not a reason to buy; missing one is no veto, since many fine modern businesses fail his strictest liquidity tests by design. The worth is in seeing exactly where a company stands against the canon, every number sourced.
- Adequate size PassRevenue ≥ $2B · $5.9B
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
- Strong liquidity PassCurrent ratio ≥ 2× · 3.56×
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
- Conservative debt NearDebt ≤ working capital · $3.5B vs $3.3B WC
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
- Earnings stability MissA profit every year (10-yr record) · 10 loss years
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
- Dividend record MissUninterrupted dividends · none paid
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
- Earnings growth —Earnings +33% over the record · —
Earnings were negative early in the record, a growth rate isn't meaningful.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Earnings are $-0.27/share and book value $1.35/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Graham would be the first to say a checklist is a starting point, not an answer. These are his defensive, bargain-hunter's tests, the cigar-butt lens. Buffett and Munger grew past it, paying fair prices for wonderful businesses; that lens lives in the moat and owner-earnings work above, and both still matter. Clearing Graham’s tests earns a closer look; failing them earns harder questions, not a dismissal.
What the price implies
reverse-DCFA price is the one input we don't pull, you bring it. Type today's close (read it off any broker or quote site) and see the owner-earnings growth you'd have to believe to justify it, set beside what Snap Inc. has actually delivered. Nothing is stored; the number stays in your browser.
Enter a price above to run it.
Graham capped the multiple at 15×; Buffett and Munger let that rule go, a wonderful business can deserve 50× if the thesis holds. Read it as the bargain-hunter's floor, not a ceiling on good sense.
The discount rate is your interest rate, what a dollar years from now is worth today, anchored to the long-term Treasury yield (~4–5% today, plus whatever premium you want for risk). Drag it toward the risk-free rate and watch how much growth the price suddenly “needs”: interest rates are gravity on valuations.
Owner earnings $609M on 1688M diluted shares; net debt $666M. This is a lens, not a price target, it says what you'd have to believe, not what the company is worth, and it runs on one year of (noisy) owner earnings at assumptions you can see and change.
What the filing emphasizes, FY2025
read the 10-K →Each year a 10-K must name what could go wrong, in the company's own words. Here are the ones Graham and Buffett would stop on, each set against the figure from the same filings that bears on it, anchored to a period you can find in the record above. We point; the judgment is yours.
- Pricing power & competitionRisk Factors
Whether the company sets its price or takes it. Durable pricing power is the surest mark of a moat; price competition is the surest mark there isn't one.
“If we fail to offer compelling product offerings with competitive pricing that users perceive to be of value, our ability to grow or sustain the reach of Snapchat+, attract and retain subscribers, and monetize our products and services may be adversely affected.”
From the recordOperating margin−6.8% (TTM), near a 10-yr high - Concentrated dependenceRisk Factors
What the whole business leans on, a product, a platform, a partner. Concentration cuts both ways, and the filing is where management has to admit it.
“Our business model materially depends on our ability to process personal data in connection with our advertising offerings, so we are particularly exposed to the risks associated with the rapidly changing legal landscape regarding privacy, security, and data protection.”
From the recordOwner-earnings margin at stake (TTM)10% - Debt terms & refinancingRisk Factors
The fine print behind the debt. Covenants and near-term maturities decide who is really in control when a year goes badly.
“In addition, our existing and future debt agreements, including our Credit Facility and the indentures governing the Convertible Notes, may contain restrictive covenants that may prohibit us from adopting any of these alternatives.”
From the recordBalance sheet (TTM)$549M net debt · operating profit doesn't cover interest - Litigation & contingenciesRisk Factors
Claims an owner inherits. Most disclosure is boilerplate; this fires only on an actual matter, a named suit, a settlement, a contingency, a number.
“As a result of such product failures or recalls, we may have to replace or offer refunds for these products at our sole cost and expense, face litigation, including class action lawsuits, or be subject to other liabilities.”
A judgment, not a number, weigh it against the filing yourself. - DilutionRisk Factors
Whether your slice quietly shrinks. New shares fund the company at the existing owner's expense.
“If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt, obtaining additional debt financing, or issuing additional equity securities, any of which may be on terms that are not favorable to us or, in the case of eq…”
A judgment, not a number, weigh it against the filing yourself. - Regulation & policyRisk Factors
Rules that can rewrite the economics, tariffs, antitrust, data, export controls.
“Legislation commonly referred to as the One Big Beautiful Bill Act, or the OBBBA, enacted in 2025, the Inflation Reduction Act, or the IRA, enacted in 2022, and the Tax Cuts and Jobs Act enacted in 2017, made many significant changes to the U.S.”
A judgment, not a number, weigh it against the filing yourself.
What changed, FY2025 vs FY2024
read the 10-K →Most of a 10-K is boilerplate carried over verbatim; the signal is in what's new. These lines appear this year and weren't there last, figure updates filtered out, so only the language shift remains.
- “The decrease of $16.3 million was primarily attributable to a reduction in unrecognized tax benefits due to statute expirations and a reduction in U.S. federal and certain state tax liabilities due to the enactment of the One Big Beautiful Bill Act, which repealed the mandatory capitalization of dom…”
- “Other expense, net in the prior year was primarily the result of $7.4 million in net losses on strategic investments and a $6.7 million net loss on extinguishment associated with the repurchases of certain outstanding convertible notes in the prior year.”
- “The decrease was primarily driven by the timing of marketing events occurring in the prior year, lower advertising and marketing investments, as well as $19.9 million in restructuring charges recognized in 2024.”
- “The increase in advertising revenue was partially offset by a decrease in the cost per advertising impression of approximately 10%, which is driven by strong growth in impressions delivery.”
- “In addition, as these initiatives evolve, we may be subject to a variety of current or new laws and regulations in the U.S. and internationally, including in the areas of privacy, security, safety, ecodesign, AI, competition, content regulation, tariffs, export controls, consumer protection, and e-c…”
Classic text analysis over the filing itself, no model wrote a word of this, and every quote is the company's own.
Peers, Internet platforms
The same industry, side by side on owner economics, compare, don't rank by a single number.● marks best in the group.
| Company | Revenue | Gross margin | Op. margin | ROIC | Owner earn. margin |
|---|---|---|---|---|---|
| SNPSSynopsys Inc | $7.1B | 77% | 13.0% | 2% | 19% |
| SNAPSnap Inc. | $5.9B | 55% | -9.0% | -9% | 7% |
| CDNSCadence Design Systems, Inc. | $5.3B | 99% | 28.2% | 44% | 30% |
| RBLXRoblox Corporation | $4.9B | 78% | -25.2% | -534% | 28% |
| CRWDCrowdstrike Holdings, Inc. | $4.8B | 75% | -6.1% | — | 27% |
| PINSPinterest, Inc. | $4.2B | 80% | 7.6% | 8% | 30% |
| MTCHMatch Group, Inc. | $3.5B | 73% | 25.0% | 27% | 29% |
| DDOGDatadog, Inc. | $3.4B | 80% | -1.3% | -1% | 29% |