Snap Stock Soars: Earnings vs. Reality

Snap's AI Gamble: A Real Surge or Just Smoke and Mirrors?

Snap's stock jumped over 22%—more like 25% if you caught it in extended trading—after their Q3 2025 report. The headlines are all singing the same tune: revenue beat, strong forecast, and a shiny new partnership with Perplexity AI. But let’s pump the brakes for a second. I've seen enough of these quarterly reports to know that the devil is always in the details.

The Perplexity Partnership: $400 Million Worth of Hype?

The Perplexity AI deal is the big kahuna here. $400 million to be integrated into Snapchat's Chat interface starting in 2026. Sounds impressive, right? But let’s break it down. That $400 million is spread out over…how many years, exactly? The press releases are suspiciously silent on that point. Let’s assume it’s a 5-year deal (a reasonable guess). That’s $80 million a year. Not exactly peanuts, but is it a game-changer for a company projecting nearly $1.7 billion in revenue per quarter?

And what does this partnership actually mean? Perplexity’s “answer-engine” will be in Snapchat’s chat. Okay… so it’s a glorified search bar? Snap already has "My AI" chatbot. Are they admitting that their existing AI is subpar and outsourcing the real work? It feels like they are.

I've seen a lot of tech companies jump on the "AI" bandwagon, and this feels a bit like that. Are they truly innovating, or just slapping an "AI" label on something to goose the stock price? What happens if Perplexity AI gets acquired or their technology becomes obsolete? Does Snap have a backup plan, or is their AI strategy entirely dependent on an external partner? These are questions that Wall Street seems to be ignoring in its rush to celebrate the stock surge. Earnings live: Snap stock soars, DoorDash and Duolingo plunge in post-earnings swoon - Yahoo Finance

The Numbers: Are They Really That Good?

Now, let's dig into the financials. A $0.06 loss per share is better than the expected $0.12 loss. Revenue grew 10% year-over-year to $1.5 billion. Daily active users (DAU) are up 8% to 477 million. On the surface, it looks like a solid quarter.

But here's the thing that jumped out at me. Snap guided for 476 million DAU, and they hit 477 million. They barely exceeded their own guidance. That’s like a student bragging about getting a C+ when they were aiming for a C. It’s not bad, but it’s hardly a reason to throw a party.

And that 10% revenue growth? It's a far cry from the explosive growth Snap saw in its earlier years. The company is maturing, which means growth is slowing. That's not necessarily a bad thing, but it does mean that Snap needs to find new ways to generate revenue. Is AI the answer? Maybe. But so far, the numbers don’t definitively say yes.

I looked at hundreds of these filings, and this particular growth rate, while positive, doesn't justify the market's reaction. It is as if the market is so desperate for any sign of life in the social media space that they are inflating Snap's performance.

Spiegel's Vision: Social and Fun AI?

Snap CEO Evan Spiegel says their goal is to make AI "more personal, social, and fun – woven into the fabric of your friendships, Snaps, and conversations." Sounds great, but what does that actually mean? Is AI going to start writing Snaps for us? Is it going to curate our friend groups? The vagueness is deafening.

I'm not saying Spiegel is lying, but I am saying that these kinds of statements are designed to generate excitement without providing any concrete details. It’s marketing fluff, plain and simple.

He added that the partnership reflects their shared vision for the power of AI to enhance discovery and connection on Snapchat. But how will they measure this enhancement? What metrics will they use to determine if the partnership is successful? This is where the real accountability lies, and Snap needs to be more transparent about its goals.

A Sugar Rush Built on Hope

Snap’s stock surge feels less like a reflection of fundamental strength and more like a collective sigh of relief from investors desperate for good news. The Perplexity AI deal is interesting, but its long-term impact is far from certain. The Q3 numbers are decent, but they don’t justify the hype. Until Snap can demonstrate that its AI strategy is more than just a buzzword, I’m remaining skeptical.