Shares of Snap, Inc. (SNAP) jumped over 9% in overnight trading, according to Yahoo Finance, fueled by retail speculation about a potential buyout. The rally coincides with geopolitical developments regarding the U.S. unit of TikTok, owned by China’s ByteDance, which has heightened investor interest in social media stocks.
On Stocktwits, retail sentiment toward SNAP was reported as “extremely bullish” (83/100), with message volume at high levels. Over the past week, Snap stock rose more than 11%, accompanied by trading volume exceeding double its three-month average. Despite this, the stock remains down over 24% year-to-date, underperforming the Invesco QQQ Trust (QQQ), which has gained 17% over the same period.
Weak fundamentals underpin long-term challenges
Snap’s recent price movements contrast with the company’s underlying struggles. Analysts point to macroeconomic uncertainties, declining direct response ad revenues, and growing competition in social media and camera technologies as key headwinds. Following Snap’s quarterly results in early August, multiple Wall Street firms reduced their price targets.
Piper Sandler highlighted concerns over shareholder dilution and limited improvement in profitability. Other analysts noted that lower ad auction prices contributed to weaker-than-expected revenue. Short interest in SNAP has also risen to 8.50%, the highest since early 2020, suggesting some investors are betting against the stock despite retail enthusiasm.
Some retail traders liken the surge to a meme-stock phenomenon, similar to GameStop or AMC, driven by a short-squeeze rally rather than fundamentals.
Optimism fueled by innovation and buyout history
Amid the challenges, a subset of investors remains positive, pointing to Snap’s unveiling of OS 2.0 and updates to its augmented reality (AR) glasses. Historical context also adds intrigue: in 2013, Meta CEO Mark Zuckerberg reportedly offered $6 billion to acquire Snap, but the bid was rejected.
Current TikTok buyout rumors are also adding momentum to Snap’s stock. With President Donald Trump extending the deadline for banning TikTok in the U.S. to December 16, firms including Oracle, Silver Lake, Andreessen Horowitz, and News Corp. (NWS) have reportedly expressed interest in acquiring the app.