Snap (SNAP) Stock Jumps 10% After Q2 Beat - EBITDA Surged 6x and Specs Launches September 16

Snap's Q2 results highlight a significant EBITDA increase to $249.6 million from a loss of $41.3 million, due to the removal of 1,000 employees from Snap's April 2026 restructuring. Total adjusted costs during this period increased 4% year-over-year. CEO Evan Spiegel noted this improvement should help elevate their core business and strengthen Snap financially in the long run.

The resounding success of the 2026 FIFA World Cup sponsored ad campaigning during Q2, along with Snap's revenue growth, indicates their success in securing major North American clients for key advertising events. 

Growth of ad revenue for Snap's subscriptions of Snapchat+ and additional storage of Snap's Memories and Lens+ also increased during this period along with revenue growth of 85% year-over-year to a total of $316 million (19% of revenue). 

With a subscriber base of lower than 3% of their active users (with 5%-10% of users subscribing to most freemium services), the potential for revenue growth through subscriptions is vast.

Snap has set September 16 for the Los Angeles launch of Specs, slated to be the first market release of an AR smart glasses product. Snap's $2,195 product is the result of a decade long development cycle and $3.5 billion in funding. On August 3, Snap provided preliminary specs for the product at an event, but details of the product's specs such as resolution, brightness, and refresh rate, remain unpublished.

Irenic Capital, with a 2.5% shareholding, has been an activist investor requesting a shut down of Snap's AR division. However, the reported Q2 EBITDA for Snap was on the positive side, reported at $249.6 million, and the forecast for Q3 also remained positive at $300 - $350 million, providing financial leeway for Snap, and diminishing the effect of the division shut down on Irenic Capital.

Snap reported an ad revenue of $1.28 billion, a 9% growth year on year, against a reported anemic growth of 4% in the Digital Ad market. Snap's ad revenue beat is likely an indicator for an overall improvement in the Digital Ad market as we head into Meta's recovery and Google's Q3. 

Traditionally, the World Cup Effect was evident in Snap's advertising, and the reported growth in revenue was likely a reflection of a shift in advertising strategies from large firms to small/mid- sized firms. Snap, Meta, and other firms in the Ad space, have reported AI-based advertising tech as a driver for improvements in advertising. AI used for advertising is also likely to be the reason for an improvement in digital ad services throughout the sector for Q3.

SNAP is trading at $5.43 on the daily chart. The price has moved above the 50 and 100 EMA at $4.71 and $4.91, respectively. It has even broken above multiple Fib retracements. The RSI is at 84 and is clearly in overbought territory.

Snap (SNAP) Stock Price Chart - Source: Tradingview

The immediate resistance is at $5.74 and is defined by a long-term descending trendline. This trendline has been capping rallies since April. If the price does close above $5.74, $6.00 and $5.94 become the new targets. Support is defined at $5.21, $5.05 and the 100 EMA at $4.91 if the price breaks below $5.21.

Key Levels

• After-hours: Around +8-10% to approx. $5.43-$5.50, up from $5.04 close. -37% YTD pre-earnings
• Q2 rev: Actual $1.599B vs est. $1.54B (+4% beat). +19% YoY. $1.28B Ad rev (+9%) and $316M in subscriptions (+85%)
• EBITDA: Actual $249.6M vs est. $192M (+30% beat). From $41.3M YoY (-600% improvement)
• DAUs: 493M vs est. 487M (+5% YoY). ARPU $3.25 vs $3.16 expected
• Q3 rev guidance: $1.70 to $1.74B. Adj-EBITDA $300 to $350M (continued sequential build)
• Specs: 9/16 LA launch event, $2,195. Irenic Capital (2.5%) announced shutdown
• Resistance:  $5.41-$5.74 (trendline). Above: $5.94, $6.00
• Support:  $5.21, $5.05, $4.91 (100 EMA)

Two main drivers caused Snap's EBITDA to increase sixfold from $41.3 million to $249.6 million. The first was the full impact of the April 2026 restructuring, in which Snap terminated 1,000 employees (~14% of headcount), and the second was the relatively high Q2 savings on labor costs, i.e., the largest Snap operating expenditure. Revenue also expanded by 19% y-o-y while total adjusted operating costs only increased by 4%, a positive indicator of strong operating leverage. The combined effect of the positive operating leverage and the cost restructuring was significant EBITDA growth and the expectation Snap would achieve between $300 and $350 million of EBITDA in Q3, a clear indication this was the new operating EBITDA run-rate.

Snap Specs are the first entry in Snap's consumer augmented reality hardware beyond smartphones. The hardware will be revealed at their launch on September 16. Specs target the same demographic as Apple and Meta's AI glasses, leveraging Snap's demographic and their Lens Ecosystem. Snap has committed to the hardware VR through a $3.5 billion investment. Successful hardware adds additional revenue to Snap and moats the competition, and failing hardware will likely lead to the requested activism for the shutting down of the division by Irenic Capital.

Snap exceeded expectations for Q2, and their stock rose by 8-10% post-earnings. This was due to their EBITDA number, which came in at 30% better than expected, and their restructuring from April showing signs of financial improvement. Snap beat on top line revenue, daily active users (DAUs), and average revenue per user (ARPU). Their guidance for the EBITDA range of $300-$350 million suggests continued improvement.

Prices began to rise after the Bottom Line announcement on the 5$ 41-74 range. At a price of 5.43, the trend line resistance is the immediate ceiling. At 84, RSI is overbought. The September 16th launch of Specs is the next major catalyst for the company. If Specs are a successful launch, the hardware will add to a core business that is financially and top line improvement aided. Before earnings were released, the average target price among analysts was $7.26. This would put it at a 34% jump from the 5.43 post-earnings price.